Deed Adding a Child

Published by Joseph Gentile on September 6, 2024September 6, 2024

Adding an adult child to a real property deed is a significant decision with both advantages and disadvantages. Understanding these pros and cons of preparing a deed adding a child is crucial for making an informed choice that aligns with your financial and familial goals.

Pros

Avoiding Probate:

One of the primary benefits of adding an adult child to a property deed is the potential to avoid probate. This legal process can be lengthy and costly. By adding your child as a joint owner with rights of survivorship, the property can transfer directly to them upon your death without going through probate.

Simplicity:

The process of adding a name to a deed is relatively straightforward. It typically involves drafting a new deed and filing it with the county recorder’s office. This simplicity can be appealing compared to setting up a trust or other estate planning mechanisms.

Immediate Ownership Transfer:

If you wish to give your child immediate ownership of the property, adding them to the deed accomplishes this. It allows them to enjoy the benefits of ownership right away, such as the ability to live in the home or manage rental income.

Cons

Tax Implications:

Adding a child to a deed can trigger significant tax consequences. For example, the IRS may view this transfer as a gift, potentially subjecting you to gift tax. Additionally, your child could face capital gains tax based on the property’s original purchase price if they sell it in the future.

Loss of Control:

Once your child is on the deed, you no longer have sole control over the property. They have equal ownership rights, which means you need their consent for any major decisions, including selling or refinancing the property.

Creditor Risks:

If your child has existing debts or incurs new ones, their creditors could place liens on the property. This can complicate your financial situation and jeopardize the asset.

Family Dynamics:

Adding a child to a deed can sometimes lead to family conflicts, especially if you have multiple children. It may be perceived as favoritism and cause discord among siblings.

Contact Gentile Property Law Office

If you decide that you want to go ahead with a deed adding a child or if you would like to further discuss, please contact joseph@gentileproplaw.com.  An experienced attorney will get back to you and can prepare the deed, handle the notary signing and record the instrument with the appropriate office.