re: Best Way to Transfer Real Estate to Heirs

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Quitclaim deed

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Absoloutely freaking not.

Several posters (not the one I am replying to) have good answers but they need to be put together.

If the proeprty is sold, the gain is selling price less tax basis. Being the proeprty is in LA, and LA being a community property state, it is likely the tax basis "stepped up" from the 1960s cost to the FMV at the date of grandpa's passing.

If the heirs receive the property via inheritance, there will be an additional step up to the basis, as of grandma's future passing.

I understand you have no intention of selling it now, but hey, things happen.

If liability is a concern, consider having grandma drop the property into an LLC, then have grandma gift say 1% of the LLC to each of her children.

This will require a "zero" partnership return to be filed each year.

Then when grandma dies, the children will inherit her partnership interest. Then can then do what's called a 754 election to essentially get the step up.

All of this is complex and you should use an attorney and a CPA. The easiest thing to do would be for grandma to not worry about the legal liability (or to buy a umbrella policy) and let the property transfer via succession to the kids.