Figuring out what to do with property can be one of the stickiest aspects of estate planning. Property often gets stuck in probate for years, which is why comprehensive planning before the fact is paramount.
In their quest to avoid probate, some estate planners consider putting the names of their adult child on the deed to their home. However, this almost always causes more problems than it solves. Putting your adult child’s name on your deed, as per InCharge Debt Solutions, puts your property at the whim of your adult child’s financial situation.
How would this help to avoid probate?
People who do this depend on the benefits of joint tenancy. If you put the name of another person on the deed to your home, you automatically hold that property in joint tenancy with that person. Essentially, if one person on the deed dies before the other, the property will automatically transfer to the surviving owner of the home.
In this way, a parent who holds property in joint tenancy with their child will automatically pass that property to the child upon death. Plus, the property bypasses probate with this.
Why is this a bad idea?
If you own a property in joint tenancy with somebody else, both of you own that property equally. You will have no benefit because you owned the property “first.” If your child ends up with financial problems, creditors and the IRS may come after your property if your child’s name is on it. There may also be issues with marital property if your child marries and divorces with their name on the deed to your hom