One of the primary purposes of a probate proceeding is to transfer ownership
of property owned solely by the decedent. However, when the decedent owns
property as “joint tenants with rights of survivorship”, probate
is not necessary to transfer ownership because the property automatically
becomes the sole property of the survivor on the death of the decedent.
For example, when a husband and wife own their home as “joint tenants
with rights of survivorship” and one of the spouses dies, the home
is thereafter owned by the surviving spouse.
Many of people try to avoid probate by putting a child’s name on
the deed to their home during their lifetime. If the property is owned
by the parent and child as “joint tenants with rights of survivorship”,
it will automatically pass to the surviving child on the death of the
parent, without probate. However, putting your child on the title to your
home may not be such a good idea because:
- By putting your child on title to your home, you are gifting him or her
½ of its value. Any time you make a gift of money or property over
$14,000 per year, you will need to file a federal gift tax return and
may owe gift taxes to the IRS.
- Once you add your child to the deed to your home, you cannot sell it or
refinance it without obtaining your child’s signature on the mortgage.
If you become estranged from your child and need to sell your home, you
will not be able to do so.
- If you put your child’s name on the title to your home, it is now
subject to the claims of any of your child’s creditors.
- If you put your child’s name on the title to your home and die, your
child will likely pay higher capital gains taxes on the sale of the home
than they would have if the property was transferred during the probate process.
As you can see, deciding to put another person on the title to your home
can be very complicated. Before adding your child or another person to
the deed on your home, you should consult with an experienced estate planning
attorney to weigh the pros and cons in your particular situation. Call
us today to schedule a consultation at (941) 363-0110.