Kids on Deed Article

Four Reasons Why You Should Not Add Your Children to Your House

People often think that adding their children to the deed to their house will make their incapacity and death easier on their children. People assume that having their children on the deed will keep them out of court and allow them to handle their property quicker. However, there are numerous issues that can arise from adding your children to the deed; which can result in unintended consequences. These consequences can be complicated and costly. Below are four reasons why you should not add your children to the deed to your house.

  1. Creditors

When you add your children to your house, their creditors can attach liens to your home. This can be extremely problematic when you want to sell your home or refinance. Children do not tell their parents everything, and they may have tax bills they have not paid or may owe other debts to creditors. Even if you are fully aware of your child’s financial situation, they can still be vulnerable to creditors through unforeseen circumstances, such as a car wreck. If their insurance does not cover the full judgment, then that creditor can put a lien on your house to recover the judgment.

  1. Tax implications


When your children inherit your real property, they get a step-up in basis. This gives them a huge tax benefit, because there most likely will be no taxes. For example, if you bought your house twenty years ago for $20,000 and it is worth $200,000 at the time of your death, they will avoid paying taxes on $180,000 of income from the sale of the home. This is a huge savings for your children, that they would not receive if you added them to your deed now.


  1. May be difficult to remove them from the deed


If there is a reason in the future that you may want to remove your children from the deed, it may be difficult to do so. You will have to have your children’s permission to remove them from the deed, because they are technically an owner of that property. You will also have to have their permission to sell the property. Even if you currently have a great relationship with your children, there are always unforeseen situations that may change the relationship.


  1. There are other ways to achieve the same result


If you want your children to have easier access to your property, there is a way to do that. You can put your home in a trust, and that can avoid probate and allows them to more easily handle that asset in the event of your incapacity. This also protects your home from their creditors.


If you have questions about how to handle your real property in a situation of incapacity or death, or have already put your children on the deed to your home and want to change that, please feel free to schedule a consultation at our office.

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