The other attorneys make valid points. However, with the understanding that I am not providing legal advice to your specific situation, in general your parents should do a transfer such as this in two steps: first, they take the property out of their trust and into their names, as community property, then step two is for them to convey the property to you. The reason for the two steps is to take advantage of the specific exclusions from property tax reassessment that are available for transfers to/from revocable trusts (step 1) and for parent-child transfers (step 2).
What gift tax exemption are you referring to? $13k x 2? or are you talking about the Uniform Lifetime exemption determined as of the date of death?
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Be careful here. This may or may not make sense based on your particular facts. If they gift this property to you during their lifetime you take a carryover basis. If this basis is really low then this may not be a good idea as you would get a step up in basis if you recieved it via an estate. So you have to see what the capital gain (and ordinary income recapture) may be and run the numbers. YOur parents need to get with an estate planning attorney to get a comprehensive estate plan strategy here.
If you need more insight into this topic please read Gift Giving: Tax Advantages at the following link http://www.sjfpc.com/gift_taxes_planning.html
For more on estate planning and other issues, see Estate Planning Mistakes: 5 Not So Easy Pieces at http://www.sjfpc.com/estate_planning_drafting_wills_trusts.html. Please hit the like button at the end of the article if you found it helpful.
For more on talking with aging parents about this topic please read Estate Planning For Elderly Parents: Discussing Finances and Estate Planning with Your Aging Parents at the following link:
http://www.sjfpc.com/estate_planning_for_aging_parents.html. Please hit the like button at the end of the article if you found it helpful.
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Mr. Fromm is correct. You need to be very careful in how you do this. The carry-over tax basis versus the stepped-up basis for tax purposes. Your most prudent course of action would be to have your parents consult with an estate planning attorney to draft a comprehensive estate plan for your parents.
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