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.