Should I put my adult child on the deed to my house?

Should I put my adult child on the deed to my house?

One of the most common questions we get when advising on estate planning is “Should I Put My Adult Child on the Deed to My House?” Before saying “yes” or “no” to this, it’s essential to weigh the pros and cons before deciding whether to add an adult child to the deed of your house. While this approach has worked for some families, it does present risks and downsides that you should be aware of, which is why we usually advise against. This decision can have significant legal, tax, and personal implications.

Pros of Adding an Adult Child to the Deed:

  1. Avoid Probate: One of the primary advantages is avoiding the probate process for the property. Probate can be time-consuming and costly, and adding an adult child to the deed can ensure that the property transfers directly to them upon your death.
  2. Ease of Transfer: It simplifies the process of transferring property ownership, as it bypasses the need for legal proceedings or court involvement.

Cons of Adding an Adult Child to the Deed:

  1. Loss of Control: Once you add someone else to the deed, you no longer have sole control over the property. This means you cannot sell, refinance, or make decisions about the property without their consent.
  2. Exposure to Creditors: Adding an adult child to your deed can expose the property to their creditors. If your child faces lawsuits, divorces, or other financial troubles, your property could be at risk.
  3. Tax Implications: There may be tax implications for you and your child. Gifting property can affect your estate tax and your child’s capital gains tax, potentially leading to significant tax liabilities.
  4. Impact on Government Benefits: Ownership of a valuable asset like a house can affect eligibility for Medicaid and other government assistance programs, both for you and your adult child.
  5. Family Dynamics: This decision can lead to family conflicts, especially if you have more than one child and not all are included on the deed. It’s important to consider the potential for misunderstanding and disputes among siblings.
  6. Inflexibility: Once the deed is changed, it can be challenging to reverse the decision. This inflexibility can be problematic if your circumstances or intentions change.

Alternatives to Consider:

Given these considerations, it’s crucial to explore alternatives that may offer the benefits of avoiding probate while mitigating the drawbacks.

  1. Living Trusts: Establishing a living trust can be a more flexible and secure way to ensure your property is passed on according to your wishes without going through probate.
  2. Life Estate Deeds: A life estate deed allows you to retain control over the property during your lifetime while ensuring it passes to your designated beneficiary upon your death.
  3. Irrevocable Trusts: This option, if prepared by a lawyer skilled in elder law, might be able to keep the house protected from nursing home costs. It also avoids many of the creditor and tax implications described above. However, it involves giving up control of the home, and any other assets placed into the trust, which is scary for many clients.

Estate planning, including trying to avoid probate and asset protection are complex issues, that often leads people to want to add an adult child to the deed of your house is complex. However, all of the the legal, tax, and personal implications should be carefully considered. We can often provide better options. It’s important to consult with a qualified New Hampshire estate planning attorney to discuss your specific situation and goals. Together, you can determine the most appropriate strategy for transferring your property that aligns with your wishes and protects your interests and those of your heirs.

Contact our team at Cohen and Winters for a free consultation today.

Leave a Reply

Free Consultation