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People will frequently ask to add their kids to title of their house. While it may seem like this protects your child, any potential benefits are typically far outweighed by the numerous downsides. It is typically better to have an estate plan that distributes your assets and protects your heirs.
Remember …
Once you add someone to title, they are a co-owner and you cannot get them off without their agreement.
- If your child is a minor, it is ill advised to add them to title because you would need a court order to update title, sell, or refinance the property.
- If you have added an adult child to title, they must sign off on any refinance or sale of the property and could hold up the sale if they believe they are entitled to proceeds as a co-owner.
Your child’s creditors could come after your house.
- If your child is on title, their creditors can attach the child’s debts to the house and they would need to be paid in order to refinance or sell the house.
Your child might have unintended tax consequences.
- Adding your child to title means that when they sell the property your original cost basis applies for purposes of capital gains taxes; however, if they are devised or inherit the property upon your death, the child would instead get a stepped-up cost basis.
Family disputes may be more likely.
- If you add some children but not all, family disputes may arise.
- If you add all children, all must agree in order to sell or refinance the house.
This article is not intended to provide legal or tax advice. This email does not create an Attorney-Client relationship, and nothing set forth herein is to be construed as legal advice or as a substitute for the advice of a duly licensed attorney. Seek legal counsel from an attorney admitted to practice in your jurisdiction if you need legal advice or representation.
