All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.

The higher trust tax rates are for separate tax-paying trusts which are usually irrevocable trusts.You'll want to be cognizant in all of these options of the gift tax consequences of how the parents transfer ownership and when they do so. 

@Steve Burke,When you have your conversation with an estate planner, you may want to include a conversation about an irrevocable living trust and whether that vehicle meets all your requirements.

All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.

All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.

As a courtesy only, the complete text of § 3712 is provided below: The deed conveys title to the purchaser free of all encumbrances of any kind existing before the sale except:1) Any lien for installments of taxes and special assessments, that installments will become payable upon the secured roll after the time of the sale.2) The lien for taxes or assessments or other rights of any taxing agency that does not consent to the sale under this chapter.3) Liens for special assessments levied upon the property conveyed that were, at the time of the sale under this chapter, not included in the amount necessary to redeem the tax-defaulted property, and, where a taxing agency that collects its own taxes has consented to the sale under this chapter, not included in the amount required to redeem from sale to the taxing agency.4) Easements of any kind, including prescriptive, constituting servitudes upon or burdens to the property; water rights, the record title to which is held separately from the title to the property; and restrictions of record.5) Unaccepted, recorded, irrevocable offers of dedication of the property to the public or a public entity for a public purpose, and recorded options of any taxing agency to purchase the property or any interest therein for a public purpose.6) Unpaid assessments under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500) of the Streets and Highways Code) that are not satisfied as a result of the sale proceeds being applied pursuant to Chapter 1.3 (commencing with Section 4671) of Part 8, or that are being collected through a foreclosure action pursuant to Part 14 (commencing with Section 8830) of Division 10 of the Streets and Highways Code.

All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.SO, unless title was in the OP's name, they are BROKERING WITHOUT A LICENSE.

If you transfer to irrevocable trust then it is a true transfer and the due on sale applies. 

Given the size of your friend's estate by the time they die (if they play their cards right) they should get educated about irrevocable trusts and estate management.Depending on your friend's current finances and whether they want to continue working or live off  their investment income right now, they may want to some or all of their investing through a self-directed IRA (SDIRA) or other tax-benefited retirement account to defer taxation on the income and build retirement savings.

For this purpose, Borrower irrevocably grants and conveys to Trustee, in trust, with power of sale, the following described property located in the County of _______________________________________:TRANSFER OF RIGHTS IN THE PROPERTYAll references to section numbers in the Security Instrument that are contained in the Riders refer to those sections of the same number incorporated from the Fictitious Deed of Trust. ¨ 1-4 Family Rider¨ Biweekly Payment Rider______________¨Balloon Rider¨ Planned Unit Development Rider¨Other(s) [specify]¨Adjustable Rate Rider¨ Condominium Rider¨ Second Home Rider(H)“Riders” means all Riders to this Security Instrument that are executed by Borrower.The following Riders are to be executed by Borrower [check box as applicable]:(G)“Loan” means the debt evidenced by the Note, plus interest, any prepayment charges and late charges due under the Note, and all sums due under this Security Instrument, plus interest.