Should I Add My Adult Child to My Home Deed?

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Your home deed represents one of your most valuable assets.

Some people add the name of an adult child to the title of their home deed.


For probate avoidance.

Since children tend to outlive their parents, this seems a simple solution.

Not so fast.

As with much of life, what appears simple on the surface can have hidden hazards just below the surface.

Think icebergs, the Titanic, and home deeds.

So it is when adding the names of anyone besides a spouse to your home deed.

While this move is tempting, as explained in the recent Coeur d’Alene/Post-Falls Press article titled “Think twice (and read this) before putting your kids on the deed to your home, you should resist the temptation.

Adding others to your home deed can be risky business.

Here are some reasons not to add an adult child to your home deed:

Your child’s “problems” become your problems.

Stuff happens, yes?

What if your child has any divorces, debts, lawsuits, or bankruptcies? You could lose your home.

At the very least, you could spend thousands on legal fees to convince a court that your home should not be part of the assets subject to your child’s legal or financial difficulties. Either way, you lose.

Adding your child will be a taxable gift.

Unless the value of your home is below the available annual gift tax exclusion (i.e., you can gift your adult child $17,000 each year), you will need to report your gift to the IRS.

If your child predeceases you, you may end up owning the home with their spouse, children, or beneficiaries under their last will.

Do you want your daughter-in-law to be the joint owner of your home? What about your grandchildren?

The outcome will depend upon the exact language used on the home deed, making it vital to have an estate planning attorney draft the home deed document if you use this method.

Medicaid “look-back” includes transferring any assets, including real estate.

If you need to apply for Medicaid to help pay for long-term care, you will be required to disclose any gifts or transfers of assets to anyone within five years before submitting your Medicaid application.

And, yes, adding anyone’s name to your home deed is considered a gift by Medicaid. This could prevent you from being eligible for Medicaid assistance for months or as many as five years.

Co-owners must agree on decisions about the property.

Your co-owner must agree before you can sell your home, rent it, or take out a loan against the home’s value.

Can you ensure your child or other co-owner will agree to your wishes?

Capital gains taxes as co-owners are different from inherited property.

If a child inherits a property after death and then sells it, they will only be responsible for paying capital gains taxes assessed on any increase in value from the date of your death to when the property is sold.

However, if their name is added to the home deed while you are living, they will be deemed to have acquired their one-half ownership for half the price you originally paid.

They will be responsible for the capital gains taxes applied to their half.

In short, they will have a hefty tax bill, which they would have avoided had they inherited the home.

There are ways to plan for your estate to minimize probate without adding a child to your home deed.

Fortunately, these alternative strategies can be done without risking your home – one of your most valuable assets.

An experienced estate planning attorney can help create an estate plan to protect you, your home, and your heirs.

Reference: Coeur d’Alene/Post Falls Press (June 11, 2023) “Think twice (and read this) before putting your kids on the deed to your home

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