One of the overarching goals of estate planning is to help your heirs avoid probate. Avoiding probate can be desirable for many reasons, including the fact that assets may sit for years in probate depending on the situation, and probate is a public process.
Many Americans put their adult children on the deed to their home prior to death in order to avoid probate, according to InCharge Debt Solutions. However, this can be serious risks including losing your home.
Why would this help avoid probate?
If you put your adult child on the deed to your home, you both own the home in joint tenancy. So, the “right of survivorship” applies when you die. The other owner, your child, still owns the property after your death, so it is not part of your estate. The property does not go through probate in this instance.
Why would this cause problems?
You cannot name yourself the “primary owner” on the property if you hold it in joint tenancy. if you wish to sell your home or refinance, you need the permission of your adult child.
Your home becomes part of your adult child’s assets, so it is subject to judgments and liens if your child goes through a divorce or a lawsuit. For example, if your child caused an accident and the injured party sued for compensation, your child may have to sell your house to pay the judgment.
Some strategies for avoiding probate are more trouble than they are worth. Adding an adult child to a deed may be one of them.