Deeds to real estate, especially for your house, are known to be very important documents. Many consider changing a deed in order to ensure that their house gets passed to the next generation or some other significant person. This must be done with some foresight, as there have been increasing incidences of remorse once the new deed is filed, and it seldom gets reversed without a courtroom appearance.
Deeding The House To A Child For One Dollar
Deeding the house to a child seems like a great idea, particularly if it is done for a dollar. But it is not. First, the child will get your tax basis, which is the price you bought the house for some years ago. If your child sells the property years from now, the tax authorities will deduct the tax basis from their selling price and they will have to pay capital gains tax on the balance. This could be a significant amount of money if you bought your house decades ago.
Adding A Child To The Deed To Help With Expenses
More obvious problems are that you may be forced to leave your house, or, if you are remaining on the deed with your child, they will move in. I have experienced many cases where a child is added to the deed, so he/she will help pay the taxes and other bills, only to find that the child refuses. Some even cause so much difficulty in the house that the parent feels the need to get the child out, but they cannot, because the child is on the deed. I have seen children move in with their significant other, and the significant other cannot get along with the parent.
Deeding Part Ownership Of The House To A Caretaker Child
Sometimes an elderly parent will add a child to the deed in exchange for the child providing him or her with care. Once the child is on the deed, you cannot remove them without their consent. If they do not provide care, the parent is stuck. If they need to apply for Medicaid to pay for long term care, this addition may result in a penalty period when benefits will be withheld from the elderly person. This can be avoided with proper timing of the transfer and with the advice of an elder law attorney.
A Deed Is Probably The Largest Asset In Your Estate
Many times, a person’s home is the largest asset in his or her estate. Changing the deed is a significant alteration to your estate plan and could easily backfire. Often, there is an alternative way of reaching the same goal without transferring all or part of your deed. It is worth seeing an attorney before you make a decision that you could regret. Law Offices of Robert J. Shanahan, Jr. has the experience in estate planning, real estate, and elder law to help you make the right choice.