Adding Adult Children to Deeds is Almost Always a Bad Idea

Many people view adding an adult child to a deed as a quick and easy way out of probate and essentially cheap estate planning. This is almost always a bad idea.

Loss of Homestead Protections

In Florida, adding an adult child to the deed of a homestead property can cause the homestead protections to be lost entirely. This can leave the property vulnerable to creditors and other claims, and can potentially put the homeowner's living situation at risk.

Tax Implications

Adding an adult child to the deed of a property can also have tax implications because they may lose the step-up in basis that they otherwise would get in an inheritance. For example, if the property is sold after the homeowner passes away, the adult child may be subject to capital gains taxes on the portion of the property that they own because they do not realize stepped up basis. This can be a significant financial burden, and it's important to consider these potential tax implications before adding an adult child to the deed of a property.

Loss of Control

Finally, adding an adult child to the deed of a property can result in a loss of control for the homeowner. Once an adult child is added to the deed, they become a co-owner of the property, and they may have the ability to make decisions about the property without the homeowner's input. This loss of control can be particularly concerning if the homeowner becomes incapacitated or unable to make decisions for themselves. Further, as co-owners they will need to sign any new mortgage on the property or a deed for the any sale of the property. 

Creditors of Adult Children

Another potential hazard to consider is the possibility that creditors of an adult child could seize the home. It’s important to remember a young adult may still not yet have the best sense of judgment. If an adult child is added to the deed of a property and then becomes subject to a lawsuit or other legal action, the property may become vulnerable to seizure by their creditors. This could result in the loss of the property, even if the homeowner did not intend for this to happen.

Conclusion

Overall, while there are certainly some benefits to adding adult children to deeds to parents' property, it's important to carefully consider the potential risks before making this decision. Working with an experienced estate planning attorney can help ensure that you make the right choices for your unique situation and that your assets are distributed according to your wishes, while minimizing the risk of unintended consequences.

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This article is provided for informational purposes only and is not intended as legal advice. For further inquiry, please feel free to contact me at the email or telephone listed below.