Estimated reading time: 2 minutes
Jane did what many parents do, she put her son on the deed to her house to avoid probate. But when her son was in a car accident that was his fault, she learned just how big of a mistake that was. His insurance didn’t come close to covering the cost to the other driver. So, the other driver sued. The courts ruled that his ownership in the house could be used to satisfy the lawsuit. In essence, Jane just lost what she was trying to save.
Here are just some of the consequences you may not know about putting your child on the deed or accounts:
- If your child gets divorced, do you want their spouse to get half your home and accounts?
- If your child gets in an at fault accident, do you want the other person to get half your home and account?
- If your child gets in IRS trouble, do you want the IRS to put a lien against your house?
- If your child gets in credit problems, even if it isn’t their fault, do you want to have to fight their creditors to keep your money?
- If you want to sell the house, do you want to give half the money to your child?
- If you put your child on the deed to your house
- They will owe capital gains tax on their half based on what you paid for the house
- You’ve just pushed probate off onto the next generation
There are better alternatives than to put your children on the deed.