Putting Assets in Joint Names with Children
September 1, 2020
Hi everybody. I’m Jessica Rafferty. Today I wanted to talk with you about a question that I’m often ask and that question is should I put my house, my bank account, any other asset for that matter, in joint names with my child is often the person that they name. And the answer to that is really it depends, and I really appreciate when people ask that when they’re coming in for estate state planning because we can help them decide what works for them and their family. I’m very hesitant to tell people “oh yeah, that’s a great idea” because it’s not. So, here’s what can happen if you do that.
Just use your house for an example. If you put your child on the deed to your house along with you, you’ve now made them on the deed to your house along with you, you’ve now made them in the estate planning realm because that would help avoid probate, it can help avoid some of the inheritance tax that your child would have to pay and people think that it can protect their home from a Medicare lien. If it gets to that point. Now, some of that is true but what you’re doing when you do something like that is you have now made your child a joint owner with you and that then brings all the risk that your child has into your home, literally!
So, if your child is on the deed with you and your child predeceases you for example, now you’re the one that’s paying inheritance tax on half of your home and that might sound like a far-fetched thing but I literally just had that happen with the client within the last week or two. Another situation that could occur is if your child gets divorced. So, in the divorce now half of your house is your child’s. And so now half of the house is sort of up for grabs in this divorce case. Another situation, your child gets a judgment against them for whatever reason, it doesn’t mean they’re a bad person or anything like that. They might have just done something that was careless and now they have a judgment against them and guess what, now they own half of your house and so that’s potentially an issue for you.
So, before you do something like that come and talk to me. I mean there are plenty of ways to do estate planning to make sure that things work out the way that you want them to upon your death and this is probably not the most ideal way to handle things in most circumstances. So, please give me a call. We can chat about your situation. Everybody’s family is different, and you know, this may be a perfect solution for you but there are so many pitfalls and we just need to have that conversation before you do anything. So, I hope that this helps and if you have any questions like I said, please feel free to give me a call. Thank you.