Probate. The very word strikes fear into the hearts of many!
But don't let the fear of probate cause you to rush headlong into a do-it-yourself estate planning nightmare!
Deeding your home to your kids during your lifetime is one of those self-help methods for avoiding probate that can cause you a multitude of unforeseen problems later. Before changing your deed, get the facts. Adding anyone to your deed should be done cautiously and only after you have consulted with an estate planning/elder law attorney about the pros and cons of doing so for your specific situation.
Here's why adding your children to your deed can be far worse than probate.
- You can be penalized for making a gift if you need to apply for long-term care Medicaid within five years of the transfer.
- Your house may become subject to your child's creditors' or divorcing spouse's claims.
- If you need to sell the house in the future, your kids can refuse to cooperate with a sale making it difficult or impossible to get your equity out of the house.
- A stranger may end up owning a part of your home. Your child can sell his or her interest in your home without your permission during your child's lifetime. Your son-in-law or daughter-in-law could also inherit your child's share if your child predeceases you.
- If you have added more than one child's name to your deed and any conflict arises between the children in the future, it may be difficult or impossible to sell the house without filing a court action for partition.
- Your children may have to pay capital gains taxes. These taxes could have been avoided if the house had been completely inherited rather than gifted.
- Title problems, title insurance and homeowner's insurance problems. Transferring title without correctly updating your insurance can cause big problems later.
As an estate planning/elder law attorney, I see the problems caused by self-help transfers. Children come to me because they can't sell their interest in the home. Parents come to me because they are forced to live with warring family members. Before you get yourself in a bad situation, talk to an estate planning/elder law attorney first. For help with your situation, call our firm. The number is 704.887.5242.