Should You Add Your Child to Your Home’s Title?

Adding a child to your home title may seem like a simple estate plan, but it can cause tax, Medicaid, and legal issues. Learn the pros and cons before deciding.

Many parents want to pass their home to their children with minimal hassle. One common strategy is adding a child’s name to the property deed—making them a joint owner. While this may avoid probate, it often creates unintended tax consequences, legal risks, and loss of control.

The Appeal of Joint Ownership

• Avoids Probate: On death, the home passes directly to the child.

• Simple Setup: No need for a will or trust to transfer the property.

• Perceived Cost Savings: Avoids attorney or court fees upfront.

But Consider the Downsides

1. Gift Tax Exposure

   Adding a child to the deed may be treated as a gift, triggering IRS reporting and reducing your lifetime exemption.

2. Loss of Full Step-Up in Basis

   If the child receives the property during your lifetime, they may owe capital gains tax on future sales.

3. Creditor Risk

   If your child has financial issues, their ownership could expose the home to lawsuits, divorce, or debt collection.

4. Loss of Control

   Once added to the title, you typically need your child’s consent to sell or refinance the home.

5. Medicaid Penalties

   The transfer could trigger a Medicaid look-back period, jeopardizing eligibility for long-term care.

A Better Approach: Use a Trust

A revocable living trust or life estate deed can help you:

• Avoid probate

• Retain full control during your lifetime

• Preserve tax benefits

• Protect your home from unexpected claims

  
  

Contact The Law Office of Jin-Wook Kim, P.C. to discuss smarter ways to transfer your home without unintended consequences.