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Should I Put My Children on the Deed to My House?

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Many people think that putting their child’s name on the deed to their home is an easy fix to avoid probate. Sure, it will keep the home out of probate, but it opens up a number of other issues. These are some of the biggest concerns:

1. Issues with Creditors

When you add your child to the deed, they will have immediate ownership rights in the property. This means that your child’s creditors can now go after their interest in your home. They could put a lien on the home or even seize the property.

2. Capital Gains Consequences

If your child inherits property from you at your death, they will receive a “stepped up” tax basis. This means that the tax basis of the property is the property value at the time of your death. Your child would only pay capital gains taxes on the difference between the fair market value at the time of your death and the price for which the property sells.

In contrast, if you add your child to the deed while you’re alive, the price or value of the home when you bought it is used to calculate capital gains taxes. This could be significant. Considering the continuous rise in property values, especially over the last few years, if you add your child to your deed, they would likely pay significantly more in capital gains taxes if they ever sell your property.

3. Gift Tax Consequences

Adding your child to your deed can trigger gift tax consequences. By adding your child, you are effectively giving them a 50% interest in the property for no consideration. If the gift exceeds the annual gift tax exclusion amount of $19,000, you would need to file a Form 709 to report the gift. Also note that receiving the property as a gift does not get the step-up in tax basis discussed above.

These are just some of the issues to consider when deciding how you would like to pass your home to your child. There are many other ways to assure that your child will receive your house without having to go through the probate process. If you have questions about how to do this, please contact us at Sinclair Prosser Gasior to start your estate plan and schedule your personal consultation.

For more information, please join us for an upcoming FREE seminar. If you have questions or concerns about your estate plan, contact the experienced estate planning attorneys at Sinclair Prosser Gasior by calling (410) 573-4818 to schedule an appointment.

Jon J. Gasior, Estate Planning Attorney
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About Jon J. Gasior, Estate Planning Attorney

His personal experience with family and the problems that resulted from their failure to create an estate plan resulted in his desire to learn more about this area of the law. From his work in the Elder Law Clinic, he further realized the need to plan not only for death, but also for incapacity during their lifetime. About the Author !