Often I have new clients come in to consult on estate planning issues but who have already taken certain "planning" action on their own. Among the worst of these is the practice of adding their children or another person onto the title to their house. The thinking is that by doing so they will avoid probate. While this practice might in fact avoid probate, it can create far more problems than it solves.
There are at least six good reasons not to add another person (other than a spouse) onto the title of your house. These include:
1. In the event the person faces a liability or debt claim from a third party, your property can be at risk.
2. In the event the person gets in trouble with the IRS, your property can be at risk.
3. In the event the person goes through a divorce, your property can be at risk.
4. In the event you want to sell the property, you must get the other person's permission.
5. Placing another person's name on the title could be considered a gift, thereby triggering a gift tax consequence if the property exceeds $12,000.
6. Placing another person's name on the title could jeopardize your getting government help with nursing home care.
There are probably more reasons, but for now, these should be reason to follow this advice. When you consider making this type of transfer...DON'T. Instead, seek sound legal counsel on other ways to accomplish your objectives (such as by a Living Trust).
For more information, visit www.linslawgroup.com
Comments