The Listen to Lawrence Letter: Adding our Children to our Deed

Reader Question:

Hi Lawrence! We have two daughters and would like to know if we put both their names on the title of our home, would that elude probate vs. any form of trust? Thank you for your consideration!

My Response:

Yes, putting your daughters on the deed may avoid probate, but I generally would not recommend doing it just for that reason.

Once you add your daughters to the deed, you are giving them an ownership interest in your home now. That can create problems if either daughter gets divorced, has creditor problems, is sued, dies before you, or simply disagrees with you about what should happen with the house. There can also be significant capital gains tax consequences because they may lose the benefit of a full step-up in basis at your death.

A properly drafted trust can avoid probate while allowing you to keep complete control of your home during your lifetime and preserve important tax benefits.

So, yes, adding your daughters to the deed may avoid probate. But generally speaking, IT IS THE LAST THING YOU SHOULD DO!

I hope this helps!