Leaving Real Estate to Kids Without Starting a Family Feud

If you’re planning to leave your home (or any property) to your kids, don’t assume they’ll sort it out like adults. Even the most loving siblings can turn into courtroom rivals when a property is up for grabs, especially in a high-cost market like San Diego.
So how do you transfer your real estate without turning your legacy into a legal battle?

Here’s the breakdown, from a San Diego estate planning attorney who’s seen just about every possible outcome.

First, California is an expensive place to die. Even a modest home in Point Loma or Ocean Beach can push an estate well above the probate threshold. Without a proper plan, your property could land in probate, a public, expensive, court-supervised process that can drag on for over 12-18 months, and sometimes even longer.

But even with a will in place, the challenges don’t stop. Let’s say you leave the house “to all three kids equally.” What does that even mean?

Do they sell it and split the proceeds? Does one buy out the others? Does someone move in and pay rent? Who covers the taxes and maintenance while they decide?

Without clear direction, things can get ugly fast. One wants to keep it. One needs cash. The third refuses to talk to either of them unless it’s via a lawyer.

If you own property in California, you should almost always transfer it into a revocable living trust. A trust allows the home to pass to your beneficiaries without probate and gives you the power to spell out exactly what you want to happen.

Want the house sold and proceeds split evenly? Say so.
Want one child to inherit it outright? Name them.
Want to allow one child to live there for life, then pass it to someone else? Totally doable.

Trusts are flexible and private, and they let you speak clearly even after you’re gone.

You can also appoint a neutral third-party trustee (like a trusted family friend or professional fiduciary) to handle the transition and reduce the potential for family conflict.

There are major tax considerations when transferring real estate. Inheriting property typically gives your kids a step-up in basis, meaning they can sell it with minimal capital gains taxes. But gifting the home while you’re alive? Different story, and often a costly one.

Also worth noting: California’s Proposition 19 significantly limits parent-to-child property tax exclusions unless very specific conditions are met. So don’t assume your kids can just keep your tax basis.

A San Diego trust attorney can walk you through the nuances, and structure your plan to reduce unnecessary tax exposure.

Don’t add your kid’s name to the deed thinking it will “make things easier.” This creates a joint tenancy, which opens the door to major problems:

• Your home becomes vulnerable to their creditors.
• You may trigger gift taxes.
• You complicate capital gains tax treatment.
• And if they divorce? Their ex could try to claim a piece of your house.

What seemed like a shortcut often becomes a legal maze.

Sometimes, the best estate planning tool is a conversation. If you’re planning to leave property to your children, talk to them. Be clear about your intentions. Explain why you’ve made certain decisions. Surprises cause conflict. Transparency builds peace.

Just because the home means something to you doesn’t mean your kids want to inherit it. They might live out of state. They might not want the responsibility. They might be unable to agree on how to manage it.

That’s why flexibility matters. A well-drafted trust can give them options: keep it, rent it, sell it, all without fighting over the rules.

At Peaceful Warrior Law, we’ve helped families across San Diego, from Carlsbad to Pacific Beach, protect their property and preserve their peace. Whether you’re passing down a family estate or managing multiple properties, we’ll help you craft a plan that’s clear, thoughtful, and built to last.