How can we put the homes in our children's names?

It is easy to transfer title to your two homes to your children but do you really want to? You can draw a new grant deed an put them on as joint tenants. They will receive the full title upon your death without probate. However, the properties would be subject to the creditors of your kids prior to your death if they defaulted on other loans or became involved in an accident. You would also have to file a gift tax return assuming the value of the homes is over $13,000. The gift tax exemption credit is rather large now so that you would probably not have to pay any gift tax, unless you have already used your lifetime credit. A less complicated way to do this is to set up a revocable living trust. Put the homes in the trust with you as trustees. The homes will stay in your names(the name of the trust) until you die. The houses will pass to the kids on your death without the need for probate. There are other tax issues that favor the trust approach regarding the basis of the homes.

Depending on your tax/medicaid situation, you can probably place the properties into an irrevocable trust naming your children as beneficiaries by having a deed drafted conveying the property into the newly created trust and you will still be able to write-off the interest monies paid on the mortgages. This will probably not trigger the due-on-sale clause in your mortgages (fannie/freddie guidelines). If you are taking the mortgage interest write-off you should also be claiming your income from the childrens' "rent" payments, including paying Hawaii General Excise Tax on the money.

The questions bring up a number of issues. It is possible to deed the homes to the children, or to add them as owners as joint with right of survivorship. There are additional questions as to the violation of the due on sale clause which is present in most mortgages, the possible imposition of the real estate transfer tax, an "un-capping" of the State Taxable Value due to the transfer and how this might effect the principal residence exemption for the assessment of the real estate taxes on the property. If the properties are "rental units" then, there must be an accounting for income tax purposes, if your are charging interest there is an additional question. No firm advise can be given without a full exposition of the circumstances and there will be different results depending on the manner in which the transaction might be accomplished. You really need to consult an attorney.

You have a twofold question. The first part involves an estate plan. Sounds like you only need a simple estate plan. The property should be titled to a revocable trust specifying how you want the property transferred at death. Usually everything goes to the other spouse and then at the second death to the children. You should have a financial and medical power of attorney and then you need a simple will which pours all?remaining property to the trust. Second part, yes, you will owe taxes on the interest and capital gains, unless it was your principle residence 2 of the last 5 years. In fact, if you are not charging interest or if the interest charged is not the equivalent of current interest rates, interest will be imputed to you by the IRS. Seek the help of a qualified lawyer who can take care of both of your problems.