By Libby Banks, The Law Office of Libby Banks

From time to time, I have clients and friends ask me about the wisdom of putting their adult child or children on their home title (or stock accounts). Their thought is that they can avoid probate that way when they pass. My short answer is “Don’t do it!” There are many pitfalls in doing this instead of putting a proper estate plan in place. Let’s look at a few of those pitfalls.

Your Child Will Pay More in Taxes
When we sell an asset, including a home or other real estate, we may be subject to capital gains. For an adult child who is put on title during your lifetime, the amount of capital gains is calculated based on what you paid for the home. If you bought your home for $200,000 (that is called your tax basis) and it is valued at $600,000 at your death, your child pays capital gains on $400,000 when they sell the home. So, what to do instead? If you form a revocable trust and your child only gets the property in their name after you pass, their tax basis is the value at the date of your death. Using the numbers, if your child inherits the home, their basis for capital gains is the value as of your date of death – $600,000. If they sell it right away, they likely have little to no capital gains taxes. Saving your children from taxes is one very good reason not to put them on the title during your lifetime.

You Lose Full Control of Your Property
Another reason to keep your home in your name is to assure that you have full control over your own home. When you put someone else on the title, they now own it too. What if you want to sell and they don’t think you should? You can’t sell it without their signature. What if a reverse mortgage would help you financially? You can’t do a reverse mortgage with that young person on your title. Again, what if they think it is a bad idea? You may be stuck with your current situation and unable to move forward – at least not without a potential court battle. Think it can’t happen to you? We have seen these exact scenarios come up with clients and friends. Don’t put yourself in a position to have someone else in control of your property.

The Bottom Line on Joint Ownership
To avoid possible problems, avoid joint ownership during your lifetime. You are right to want to avoid probate, but our office can help you put a plan in place that will do that and let you maintain control and save your children money in the future. Give our office a call at 602-375-6752 or visit our website at