One of the most common questions I hear when estate planning with clients is: “Can I just add my child to the title of my home?”
It’s usually a well-intentioned idea, often meant to avoid probate or simplify the estate plan. But unfortunately, what seems like a shortcut can quickly lead to tax and legal complications.
When you transfer part of your home to a child, it’s generally considered a disposition for tax purposes, even if no money changes hands. That can trigger immediate capital gains tax on the portion transferred—based on the property’s fair market value. And if your child doesn’t live in the home as their principal residence? More tax could be waiting down the line when the property is sold.
Beyond taxes, adding someone to title exposes the property to their creditors, family law claims, and may limit your ability to refinance or sell without their involvement.
Some people ask about life interests or setting up a trust instead, which can sometimes offer better protection—but those come with their own complexities, including the 21-year deemed disposition rule for most trusts.
As the saying goes, nothing is certain except death and taxes—but combining the two by accident is rarely part of the plan.
The takeaway? These tools can be helpful, but they’re not one-size-fits-all—and the wrong move can cost you more than probate ever would.
If you’re considering adding a child to title or using a trust or life interest as part of your estate plan, reach out to us!
Robin K. Mann, Associate Lawyer