2 Reasons Why You Should Not Put Your Children’s Names on the Deed to Your Home


Let’s say you’re getting older. (We all are, right?) And you’re concerned about passing on your home to your children.

Should you put your children’s names on the deed to your home?

Many people add their children’s names to their bank accounts, especially as they get older, so their children can help them pay their bills and manage their finances if it becomes too difficult.

Some people add their children’s names to the deed to the family home as a “do-it-yourself” estate planning technique.

Bad idea.

It is a bad idea to try to do your estate planning yourself and to add your children’s names to the deed to your home. Working with an estate planning attorney near you is essential to reviewing your assets and devising an appropriate estate plan, including passing your home.

The Complications Are Many

Putting your children’s names on the deed to your home can have any number of negative consequences, two of which we will discuss in more detail below.

Many times, people add their children’s names to the deed of the family home to avoid probate or prevent the family home from being sold to pay for nursing home expenses. But this can lead to unfortunate consequences.

First, understand that when you put your children’s names on the deed to your home, you are giving them an interest in your real property. They now become co-owners with you in your home. This means they, like you, have the legal right to sell, devise, or encumber (take out a loan) their interest in your home. It also means that if you want to sell your home, you must get your children, as co-owners, to agree.

Now, think about this. What if the child whose name you put on the deed to your home is married? He (or she) can give, sell, or bequeath his share in your home to his spouse. Want that?

Or, what happens if your married child divorces? Because Florida is an equitable distribution state, if your child acquired title to the home during the marriage, the co-ownership interest in your home will be marital property subject to equitable division by the family law courts. In other words, your daughter-in-law or son-in-law could be awarded half of your child’s interest in your home as part of the divorce. Now think about this: almost half (50%) of all marriages end in divorce.

Another way you could end up co-owning your home with your daughter-in-law, son-in-law, or a complete stranger is if your child whose name is on the deed dies and leaves their interest to their spouse or a friend.

Putting your children’s names on the deed to your home can also lead to tax complications. Briefly, when you put your child’s name on your deed, for tax purposes, they will be considered to have acquired their portion of the home at the same price you paid for the house. If, at the time of your death, your child sells the home, he or she will have to pay capital gains tax on the part of the home they acquired before your death.

Depending on how much equity you have in your home, the capital gains tax consequences for your child could be considerable. In contrast, if your child does not inherit his/her portion of the home until after your death, they take the home based on the date of death value, which in almost all cases is going to be far closer to the current market value than what you originally paid for the home. Then, when they go to sell it, there will be no capital gains tax.

These are just some of the negative consequences of putting your children’s names on the deed to your home. There are others.

Here are 2 Additional Reasons Why You Should Not Put Your Children’s Names on the Deed to Your Home

  1. Creditor’s Claims

As noted above, when you put your children’s names on the deed to your home, you give them a legal interest in it. That comes with responsibilities and privileges. One of the privileges we mentioned above is that your child now has the legal right to encumber his/her interest. That means he can take out a loan and use his interest in your home as collateral.

It also means that if your children have unpaid debts, their creditors can use your home to collect on the debt. Your child may have credit card debt, unpaid loans, or may have liability from lawsuits or accidents. The point here is that if their name is on the deed to your home, you may end up paying for these debts with your home. Creditors can put a lien against your house, preventing you from selling or refinancing your home until that lien is paid off.

  1. Medicaid’s Look-Back

One reason older people add their children’s names to the deed on the family home is that they believe it will prevent Medicaid from taking the home to pay for nursing care. They think that by getting title to the home out of their names, Medicaid won’t know that they have a house that could be used to pay for their care.

But this is an ill-advised approach to providing long-term health care.

Medicaid has a 5-year “look back” procedure. This procedure, part of the Social Security Code, is used by the government to ascertain whether an individual has the resources to pay for his/her long-term care. Medicaid looks back 5 years before you apply for benefits to see whether you gave away assets like money or your home, which could have been used to pay for your care. If they find that you did this, you may pay penalties or lose your benefits.

There are proper ways to structure your assets that do not involve putting your children’s names on your deed and do not violate Medicaid’s 5-year look-back rule. To learn more about this, contact us.

Whatever your estate planning needs are, it is always a good idea to consult an experienced estate planning lawyer near you before you do anything to get the help and advice you need.

Talk to our Estate Planning Lawyers  

Our team here at SJF Law Group works hard to ensure that your wishes will be followed and your loved ones are taken care of when you are gone. Our attorneys expertly guide individuals and families through the complex probate process and capably handle all aspects of estates and trusts’ creation, administration, and settlement. When you work with our Fort Lauderdale estate planning attorneys, you get more than just an estate plan: you get peace of mind.  

As estate attorneys, we serve individuals and families in the vibrant communities of Plantation, Fort Lauderdale, Boca Raton, West Palm Beach, and Miami, FL. We are also pleased to offer the options of both in-person and virtual appointments throughout Florida to make our services accessible no matter where you are located.  

If you would like to discuss your specific situation with one of our estate planning lawyers, do not hesitate to contact our law firm at 954-580-3690 or fill out ourcontact form.

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