Why Adding Your Child to Title on Your Home is a Bad Idea 

Why Adding Your Child to Title on Your Home is a Bad Idea 

Thinking about adding your adult child to the deed on your way home as a way to avoid probate, well think again. In my many years of experience as an estate planning attorney, I can detail for you several reasons why a child should never be added to title on the deed to your home. First, adding a child to title does not protect against Medicare estate recovery as would a living trust. Second, while many adult children are happy to now be an owner of a home, often our children are not forthcoming about their own debts, and your home now becomes subject to those debts. Third, adding a child to title could impact your mortgage. The lender could call due your entire remaining loan balance. The lender could also insist that your child submit a loan application to qualify to be added to the loan, and which could increase your interest rate. Fourth, whenever someone is added to title it becomes more problematic to obtain a refinance or equity line of credit. Adding a child to title on your home could also lead to an inquiry by the County Assessor with regard to a possible property tax reassessment. Yet another drawback to adding a child to title on a home relates to the capital gains tax. This is for the reason that adding a child to title alters the tax basis on your home. And finally, if there is an expectation that the child added to title will sell the home upon your death and distribute the proceeds to your other children, a gift tax issue has arisen. All of the foregoing can easily be avoided by way of a strong estate plan. The centerpiece of that estate plan is a living trust.  

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