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My understanding of what happens when the future beneficiaries names have been added to the title of the house with the owner is this:

CIVIL LAW: the house now belongs to all parties named on the deed.
Any creditor can attach a lien to the property if a judgment is
made against any owner named on the title.

TAX LAW: the house belongs to all named, but unless a completed gift has been made, the tax basis remains with the original owner and the added title holders have ZERO basis in the property. So if the original owner passes, the remaining holders get stepped up basis on the property 100% and probate is avoided.

Phil, Ira and others, do you agree?

I'm not a lawyer, but I would tend to agree. The main issue in this set of facts revolves around whether the completed gift is made when the mother executes the quit claim deed or not until the deed is recorded. A subsidiary issue might be whether the mother could have avoided a potential lien by recording a previously executed quit claim deed. My point in all this is that the answers to these two questions will be determined by state law, not federal law. So anyone contemplating a similar transfer had better know their local laws BEFORE doing anything.

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