Now let me address a transfer signed by the parties that are necessary. Here, a deathbed quit claim is certainly legal but not prudent from a tax standpoint.

When one gifts assets during lifetime the beneficiary receives the asset at the grantor’s tax cost basis. Contrast this result to the situation where the beneficiary inherits the assets after death, when she receives a step up in tax cost basis equal to fair market value as of the date of death. This step up in tax cost basis at death, often reduces or eliminates the capital gain tax consequence. In your example above, a joint owner would receive a step-up in one half of the value of the home as of the date of death of the joint life owner.

Since a lifetime gift is a transfer possibly subject to gift tax, then there is no transfer tax advantage for a deathbed transfer. Therefore, the deathbed transfer often doesn’t make sense from a capital gains tax standpoint, although competent tax counsel should be consulted in any situation.