Recently, I received an inquiry from a client who wanted to understand whether it is possible to purchase real estate in California and have the property recorded under the name of their minor children.

Although I am not a legal expert, I provided some information for this client's reference:

Firstly, the current laws in California do allow minors to hold real estate. However, in practical real estate transactions, this practice is not common. The reason may be that California laws prohibit minors from transferring or entering into contracts related to real property. This means that if a child owns the property, it cannot be sold or rented until they reach the age of majority.

Furthermore, if the property is held in the name of minor children, the cost of owning the property in high-cost areas may potentially increase. This is because the annual property taxes would be the responsibility of the children, but since minors do not have income, if parents cover the property taxes on behalf of their children, it could be considered a "gift." Once the gifted amount exceeds a certain threshold, the U.S. Internal Revenue Service (IRS) may impose a gift tax. The gift tax exemption amount was $15,000 per person per year in 2022 and is $18,000 per person per year in 2024, so it may vary each year. For specific details, it is advisable to consult a certified public accountant.

Another point to consider is that once the children reach adulthood, they have the right to sell, rent, or use the property as collateral for a loan. Parents, in this case, do not have any legal rights to the property.

Given the above considerations, I would recommend that the client consider using a "living trust" to place the property within the trust, with minors as beneficiaries. Of course, I strongly advise the client to consult legal professionals in California, such as estate planning attorneys, in advance to ensure that the living trust can meet the needs of minor beneficiaries.