Putting Children on the Title

On June 6, 2011, in Uncategorized, by Joseph Trojack

We are frequently asked how to put children’s names on the title of the parents’ house, as a means to avoid probate. At first blush, this seems like a quick and easy way to pass title to children. However, we call your attention to several problems in doing this:

1. Judgments and divorce against your children could result in liens or court ordered sale of property.

2. If the value of the share you give each child exceeds $13,000.00 per giver or $26,000.00 per couple, you must file a federal gift tax return and you may have a gift tax to pay.

3. You must obtain you children’s consent to make any improvements to your home.

4. If you need to borrow money to make those improvements, your children’s credit history may be used to determine what loan rate you qualify for.

5. If you want to sell the house or take out a mortgage on it, your children and their spouses must also sign.

6. If you sell your home and your children let you keep the money, they must file a federal gift tax for the share they give up (if the amount exceeds $13,000.00 per giver or $26,000.00 per couple)

7. If you sell your home for more than you originally paid, your children will owe capital gains tax on their share of the profit, even if they give you all the money.

8. You cannot change your mind and take a name off the title on your own.

9. If the children are under 18 years of age when you sell, mortgage, or die, they will need a guardian appointed by the court.

Get help from an attorney who can go over these and other factors. It certainly is better than having strangers take over your home or paying thousands of dollars in taxes needlessly.

 

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