Putting Children on Title

One of the biggest mistakes I find clients and people doing today is putting their children or other family members on title to their property.

While in some cases there may be a good and valid need for putting a family member on title, typically people make this decision without realizing the consequences. To many its just a simple document that adds their son or daughter on title and many times the parent or parents think they are protecting them self by doing this when in fact they are not.

First and foremost, putting a family member on title may create a huge tax problem - gift tax and/or capital gains tax. Second, it creates some potential legal problems and creditor problems...
Does this family member have a judgment against them? Do they have debt? Tax liens? Child Support Owed? This is just a few of the problems that occur when putting others on title without the advice of an attorney or professional.

Another thing that is missed by many is that every person that holds title should have estate documents in place. Once you put a child or family member on title you now have some potentially huge legal problems if or when that family member becomes incapacitated or dies. Do they have an estate plan? A Will? Trust? Power of Attorney for Finances? If they don't have some or all of these documents; your property may become victim to the court system through a conservatorship or probate case.

Last, if you have not specifically set forth whose property it is or what percentage interest each person on title has, this can create some HUGE family problems. If you put your son on title, do you intend that he live in the home after you have passed? Do you intend that he share the home with other siblings? Who is to pay the expenses and costs? How is the home to be divided? Is it to be sold or rented?

Many clients come to me and tell me that they were worried they were getting old or were concerned regarding Medicare expenses or not being Medicare eligible. The problem here is that without the right guidance and legal advice from the beginning, actions such as transferring assets (in this case real property) to family members can become a huge problem - much worse than what caused the original concern.

Parents, Grandparents, Kids, Families, please do not change title on your real property until you have sought legal guidance and advice. You may create a bigger problem than the one you are trying to solve! As the saying goes: Hindsights 20/20. I hope this blog helps one person from making Real Property Title Mistakes - many happy blessings to you and your family.
Shadi Shaffer, Your Personal Family Lawyer