An interspousal transfer deed is a specific legal instrument allowing spouses to transfer real estate ownership between each other, often without the typical transfer taxes or gift taxes that property transfers usually trigger. This tool simplifies changes in property ownership occasioned by divorce, estate planning, or marital status changes.
How Does an Interspousal Transfer Deed Work?
The deed functions as the official document that evidences who owns a particular property. When transferring ownership between spouses, the interspousal transfer deed must be drafted accurately, signed in the presence of a notary public, and recorded with the county recorder’s office. This formalizes the ownership change for public record.
Common Uses of Interspousal Transfer Deeds
- Divorce: Often used when one spouse is awarded the family home, enabling a clean, tax-free transfer of ownership as part of the divorce settlement.
- Estate Planning: Helps manage property ownership, such as transferring separate property into joint ownership or trusts to facilitate smooth inheritance.
- Adding a Spouse to Title: Enables a spouse to be added as a co-owner on a property acquired before marriage.
Key Benefits
- Exemption from Transfer Taxes: Most jurisdictions waive transfer taxes on property transferred between spouses.
- Avoids Property Tax Reassessment: In many states, including California under Proposition 13, interspousal transfers don’t trigger reassessment that would increase property taxes.
- No Federal Gift Tax Implications: The IRS excludes transfers between spouses from gift taxation (see IRS Publication 504).
Important Considerations
- Mortgage Liability Remains: Transferring the deed does not remove mortgage debt obligations. The spouse on the loan remains liable unless the mortgage is refinanced.
- Irrevocable Transfer: Once executed and recorded, ownership changes permanently.
- Legal Advice Recommended: Due to the legal and tax implications, consulting a real estate attorney is advisable.
Frequently Asked Questions
Q: Is an interspousal transfer deed the same as a quitclaim deed?
A: No. While both transfer ownership, an interspousal transfer deed has specific tax exemptions and is tailored for spouses.
Q: Can unmarried partners use an interspousal transfer deed?
A: Generally, no. It applies to legally married couples or registered domestic partners.
Q: Do I need an attorney to file this deed?
A: It’s highly recommended to ensure the process is legally sound and rights are protected.
For more on property transfers and estate planning, see our glossary on Real Estate Deed and Estate Planning.
Learn more about tax rules from the IRS official site.