Why Transferring Property Via Deed May Not be a Good Idea
Why Transferring Property Via Deed may not be a Good Idea
Deciding what to do with your property and assets after death can be quite difficult. Who do you
want to own your property? How does property get transferred? What is probate? Should I just
transfer ownership during my lifetime instead of waiting until after death? These are frequently
asked questions for individuals who are making their estate plans. For some, they think that
transferring ownership of the property during their lifetime is the way to go. They think that by
adding their children, grandchildren, or other intended beneficiary to the deed, they can avoid
any issues that might arise after their death. While on the surface this might seem like the best
option, transferring property to another individual before your death might result in unintended
and undesirable consequences.
The issues surrounding transferring property via deed to another person stem from the ownership
rights the other person would then have to your property. For example, an individual who owns a
home and wishes to leave it to a child after death might consider putting that child on the deed
now. The child who is included on the property’s deed is now a co-owner of the property. This
might not seem like an issue, but sharing ownership with someone is a risk in and of itself.
The following are issues that might arise when sharing ownership:
- Civil suits: If the co-owner of your property is sued, your property could be at risk. You
do not want to lose your home because someone else is being sued.
- Even if you are the co-owner of the property with your child, you do not know what someone
else is capable of. The co-owner might try to evict you or otherwise take away your
ability to live in your own home, even if you are currently living there. A California
couple in 2016 found themselves in this situation.
- Untimely death: If the co-owner passes away before the other individual, there is the
possibility of the other owner being subjected to paying taxes including capital gains
taxes due to not receiving a step-up in basis.
- Lines of Credit: The co-owner of the property can take out a mortgage or other equity
without your consent. Beyond just knowing what lines of credit are tied to your property,
if the co-owner falls behind in payments, then your property is in danger.
In order to avoid any issues with the co-ownership of property, you can pass along that property
through a trust or a will. An experienced estate attorney can help you determine the best way to
handle your property after death. The estate attorneys at the Law Offices of Kris Mukherji are
here to help you create an estate plan that works. We know that it can be confusing to determine
what to do with your assets and property after death. We want to eliminate this confusion and set
you up with an estate plan that addresses issues and gives you the peace of mind that your
property is taken care of following your death. Contact us today for a consultation.