Don't add your kids to your property title until you read this

Thinking About Adding Your Kids to Your Property Title? Here’s What You Should Know:

It’s common for parents to consider adding their children as joint owners of their home, thinking it’s an easy way to pass on the property. But this decision comes with some important implications:

1. Capital Gains Tax: If your child is listed as a joint owner on a property that isn’t their primary residence, they could be legally liable to pay capital gains tax when the property is sold. Even if the house is intended as their inheritance, any appreciation in value could lead to unexpected and significant tax bills that could be in the hundreds of thousands of dollars, depending on how much the house has appreciated by. If your kids don't have this cash sitting down, they might be forced to sell the property under duress to pay the bill.

   
   

2. Marital Claims: If your child gets married, their spouse could automatically gain a claim to the property. This can complicate matters, especially in the event of divorce.

   
   

3. Disagreements Over Sale: Once someone is added to the title, the property cannot be sold without everyone’s written consent. If conflicts arise, this can create serious issues among beneficiaries and affect your long-term intentions.

   
   

4. Creditor Risks: If your child runs into financial trouble, creditors could seek claims against the property, potentially putting your home at risk.

   
   

5. Insurance Considerations: Failing to notify your insurance company of a title change can void your insurance policy. You may not find out until it’s too late—when you need to file a claim.

   
   

Ensure that estate planning is part of your broader financial strategy. It can potentially save you and your loved ones hundreds of thousands of dollars in taxes and unnecessary legal fees.