Should I Add My Kids to the Deed?

middle age

The short answer is NO.

Usually parents who are doing this have two commendable goals in mind: avoiding probate and ensuring that the house passes to their kids.

The theory behind this form of DIY estate planning is good; however, it comes with many significant risks and downsides.

These goals can be accomplished by putting the house in a revocable trust which AVOIDS these big negatives.

Adding your kids to the deed:

Means you lose flexibility because they are now co-owners. If your finances change and you need to sell the house, they are legally entitled to a share of the proceeds. Also, if you want to sell or refinance the property, you technically need their permission.

Means they lose the step-up in basis when you move on from this life. In terms of your house, this can expose them to tens of thousands of dollars in additional tax liability.

Exposes you to their financial problems. If they get into serious debt, collectors can force a sale of your house to get that satisfied.

Putting a simple trust in place doesn’t have to be painful or expensive. There are both online resources and reasonably priced legal counsel to help you do so.I can point you toward both as a part of your comprehensive financial plan.