I’ve coached quite a lot of people on the dangers of putting children on their deeds. There are better ways for them to get the land or house without putting them on the deed now.
The first problem is capital gains tax. If you put children on the deed, then you have made a gift of part of the ownership to them. They are supposed to pay capital gains tax. But they don’t pay it based on the day of the gift. They owe it based on the price you paid.
The second problem is that you are exposing your land or house to their creditors, the IRS, and any lawsuit judgment that they may get against them.
The third problem is if you need Medicaid within 5 years of putting them on the deed, it is considered a gift and you may face a Medicaid penalty.
Instead of putting them on the deed, if you need somebody to have control of the property in case of your incapacity, create a durable power of attorney.
If you want them to have the property but are scared that it will have to go through Probate, you have ways to do that.
The post Stop Putting Your Kids on Your Deeds appeared first on DeWitt Law Firm, PLLC.
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