Should I add my Children to my Deed?
Considering the ownership of your real estate is part of any estate plan. There are both benefits and detriments to any transfer decision. In order to add your children to your property Deed, you will need to have a new Deed prepared. You and your spouse will be Grantors and your child or children will be the Grantees. Unless your child actually pays you money for the transfer, you are making a gift. Depending on the value of the interest transferred, there could be gift tax owed.
There are numerous ways that a parent and child can own property together. The parent can transfer a current interest making the child an immediate co-owner. The parent can retain a life estate and transfer the future or “remainder” interest to the child. For more detail on ownership options, see our recent Blog “Share the Land."
Having your children as co-owners or remainder owners for your property may simplify the transfer at your death. Their having joint management rights and debt obligations for the property may also be a benefit. However, depending on the interest that your child receives, their future judgment creditors and spouses could take advantage of that interest. Also, co-owners can potentially force property to be sold. It is important to understand your options and the extent of the rights you are transferring when you add your child to your Deed.
If you have transferred an interest to your child and then he or she predeceases you, their interest will be part of their estate, subject to their creditors. Their beneficiaries will now be your new co-owners. You can avoid this problem by making sure that your beneficiaries also have an estate plan that will result in continued family ownership.
If you would like to discuss the pros and cons of transferring an interest to your children or want to have a Deed prepared, please contact Irvine Law Firm.