At times, there can be the thought of adding someone to title on an asset you own. Often times that person is a child. It’s generally fairly simple to do and seems relatively harmless, so what could be the problem? Please THINK 3 TIMES and remember this short article, before signing!
The first thing to ask yourself is, “What am I trying to accomplish?” Is the reason for adding a child to title to avoid probate, or to have convenience with someone else on the account or asset, or is it a true gift? Often times, the end result you are seeking can be accomplished without having to put someone on title with you. For example, if you want to avoid probate of your home at your death, placing title in a trust that you create and manage is a simple solution. If convenience is the reason, naming someone as a co-signer or your agent (not an owner) on the account might solve the issue.
Consequences of adding a person on title can be substantial
You are making a gift of some of that asset. You owned 100% of the asset before the adding the new person to title. After adding the person on title you are now something less than 100 percent (50 percent less if you add one person to title). If the value gifted is more than $19,000 in 2025, there will be a gift tax return to be prepared and filed.
Instead of being the 100 percent owner and controlling what happens to the asset, when you add someone to title you no longer control the entire asset. You will need the consent and sign off of the other co-owner(s) for something to be done.
If the addition of a person is to real property, the addition could cause property tax reassessment.
If the title that you take with the additional person is joint tenancy, by law, the entire asset will pass to that person should you die first. If you have other children, they do not take any part of this asset. So you may be unintentionally excluding your other children. Even if the owner child (who now owns the entire asset) wants to divide the asset with siblings after your passing, that child will be making a gift and may have to file a gift tax return. You may not have considered any of this when you simply added a child to title.
By adding another person to your asset, if that person gets divorced or has a judgment against him/her, then at least their portion of the asset could be claimed by their creditors. Why subject your asset to depletion by the actions of another person?
These are just a few examples of issues that can surface when placing another person on title to an asset. If you ever begin thinking along these lines, please schedule an appointment with an Elder Legal attorney before you do anything you might later regret.
Article shared by Robert Triplett, an attorney with Family Security Law and a member of Moving Seniors Forward. The firm provides legal family security resulting in peace of mind through trusts, wills, durable powers of attorney, deeds and other essential documents. It also handle probates, trust administration, conservatorships, Medi-Cal planning, IRA Trusts and real estate transactions. Call 805-496-4681.