6 Reasons Not to Put Your Child’s Name on the Deed to your House

Instead of drafting a Will, many people just put their child’s name on the deed to their house.  Their goal is to make things easier for their child by eliminating the need to go through probate.  If the house is the only asset, this can be an effective way to avoid probate.  (If there are other assets besides the house which they still own in their sole name – their child will still have to go through probate.)  In Maryland, though, probate is not a particularly daunting or expensive procedure.  In my opinion, the disadvantages of putting your child’s name on the deed far outweigh the advantage of avoiding probate.

1.  Loss of Control

When your child’s name goes on the deed, your child becomes the legal co-owner of the house.  Should you at some point want to sell the house and move to Florida, your child must agree.  If they don’t agree, you cannot sell.  No Del Boca Vista for you!

2.  Inheritance by Others

If your child dies before you, depending on the way the deed is worded, your child’s ownership interest in the house could pass to their heirs.  You could end up owning the house with your son-in-law.  Definitely no Del Boca Vista for you!

3.  Exposure to Creditors

Because your child is now a joint owner of your house, your house is also your child’s asset.  Your house is now exposed to your child’s creditors.  If your child runs into tax problems, a tax lien could be filed against your house.  If your child declares bankruptcy, your house may have to be sold.  If your child is sued as a result of a motor vehicle accident, your house could be attached.

4.  Taxable Gift

Putting your child’s name on the deed may seem like a simple transaction, but it is legally a gift of half the value of your house.  If your house is worth more than $26,000, a federal gift tax return is required to be filed.

5.  Capital Gains Tax

When you put your child’s name on the deed, the child is considered to have acquired their half of the house at half of the same price you paid for the house.  Let’s say that the house you paid $100,000 for 30 years ago is now worth $500,000. (Now that’s wishful thinking!)  Your child now owns half the house and is considered to have acquired it for $50,000.  After you die, if your child sells the house for $500,000, the child will have to pay capital gains tax on the half of the house they acquired before you died.  In this scenario your child would owe capital gains tax on $200,000.  (This assumes the house is not your child’s primary residence.)

Conversely, when your child inherits the house after your death, they take the property at your date of death value.  Even though you only paid $100,000 for your $500,000 house, your child is considered to have acquired the property for $500,000.  Thus, if your child then sells the property for $500,000, there is no capital gains tax.

6.  Medicaid Penalty

Medicaid is a quasi state/federal program that will pay for nursing home care for individuals without sufficient resources.  In the application process, Medicaid looks for whether the individual has given money away in an attempt to become eligible for benefits.  Putting your child’s name on your deed is considered a gift and as such may trigger a period of ineligibility for Medicaid benefits.

David Galinis
Managing Partner – Estates and Social Security Practice
Berman, Sobin, Gross, Feldman & Darby, LLP
481 N Frederick Avenue, Suite 300
Gaithersburg, MD 20877
301-670-7030
dgalinis@bsgfdlaw.com
www.BSGFDlaw.com
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92 Responses to 6 Reasons Not to Put Your Child’s Name on the Deed to your House

  1. Maria Theesen says:

    Michael: Look at the pit falls if I deed the house to you. I’m going to check with William Hoag at Newamerica funding and see if there is a way to refinance and put in your name.

  2. mary says:

    My mother has my sister and myself on the deed to her town house. She is selling it and moving into a an apartment. We signed off on the P&S so she could sell it. Now it seems there is a question on whether we would be hit on taxes after it is sold because we are on the deed. She is waiting to hear if we need to be removed from the deed. Any advice?

    • dgalinis says:

      Dear Mary,

      Thank you for your comment. You and your sister may have to pay capital gains tax. I assume that you and your sister are not living in the house. Therefore, any gain (selling price greater than your mother’s original purchase price) will be a capital gain to you and your sister. I also believe that your mother may also be subject to tax because the exclusion for principal residence may not apply because you and your sister are also on the deed. Thus, I agree that you should consider removing your and your sister’s name from the deed.

      This is a good illustration of a 7th reason not to put your child’s name on the deed to your house.

      D

  3. Paul says:

    My grandfather and grandmother bought a house in the 1960’s and put all 5 of their children on the deed, 7 people all together. My grandfather has passed and my grandmother still lives there. 3 of the children currently live there and another plans on moving back in after retirement.

    If that was their primary house of residence for the past 5 years & they sold it at a later date, would they have to pay capital gains on it?

    • dgalinis says:

      Dear Paul,

      Thank you for your comment. The owners who have lived in the house for the past 5 years can claim an exclusion of the first $250,000.00 of capital gain. The owners who do not live in the house are subject to taxes on their capital gain.

      David

  4. adolly says:

    Should i make a trust for my property in order to avoid probate? If so, how do I do that?

    • dgalinis says:

      Thank you for your comment. A revocable living trust, drafted and funded properly, can avoid probate. You would need to consult with an estate planning attorney in your state. If you live in Maryland, feel free to contact me.

      As to whether your primary estate planning goal should be to avoid probate is another matter. In Maryland, the probate process is not something to be avoided at all costs as it may be in other states. As a result, it is rare that I recommend this type of trust in my practice as it is more expensive and complicated on the front end.

      David

  5. Kathy says:

    My mom had changed her deed in the name of us 5 children, advised by her attorney to save inheritance tax? Not sure why, but now she has moved to a senior apartment complex and we want to sell the house and give the money back to her for her expenses. How can we avoid income tax for the 5 of us? Can we or should we put the deed back in her name before we sell?

    • dgalinis says:

      Dear Kathy,

      Thank you for your comment and I apologize about the late response. If you sell the house for more than your mother originally paid for it, you and your siblings will pay capital gains tax. If you put the house back in your mother’s name, you are required to file a federal gift tax return if each share of the house is worth more than $14,000. As there may be other issues involved (e.g., Medicaid eligibility), I would consult with your attorney before proceeding. If you no longer have counsel and live in Maryland, you could certainly contact us.

      David

  6. kimyen says:

    My New Jersey property was given from my ex after divorce and it is my only real estate and mortgage was paid off . I have been living with no job since hurricane Sandy and in desperate financial hardship with the the huge hospital debt and many potential liens on my property, so I want to prepare to avoid losing my property in the near future.
    Therefore I want to add to my deed my minor child 10 years-old with 1% of the value of my property during her joining ownership with me and 99% of the value of my property for my daughter at any time of closing sell of the property and 100% at my death. The decision of selling the property remain on my decision at all time before my dead.
    Please help me for these questions below as soon as possible that I could have enough time to avoid the liens from creditors.

    1. Can I use “Lady Bird Deed” or Quit Claim Deed in this case ?
    2. Can my “minor” children be added on the deed ? Is it legal according to NJ law?
    2. Is there any “TAX PROBLEM” for doing so in the long run ? Any downside for that strategy?
    3. If after my daughter on the deed, there was any lien to the property due to the hospital cost, could I avoid that lien with only 1% of the property (value $234,000 property tax value) and could save the house for my children ?
    4. Can I be a guardian for them in case I sell the property while she is still a minor? If not then how can I sell without their consent ? Can my ex be her guardian in this case (he is primary custody after divorced as I could not afford for my children’s
    living ?
    5. If later I wanted to reverse to take off her name of the deed for easier to sell the property, is it possible or illegal to do so ?

    Thank you so much in advance for any help could be made ! I appreciate your help with all respect !
    Sincerely yours.

    • dgalinis says:

      Thank you for your comment and I apologize for the delayed response. Unfortunately, I am not licensed to practice law in New Jersey (only Maryland, Virginia and the District of Columbia). You need to consult with an attorney in New Jersey.

      David

  7. Kellie Pagan says:

    Dear Mr. Galinis:

    My father wants to make a gift of $250K to my husband and I so that we can buy our first home. He’s then going to loan us approximately $300K for the rest of the purchase, with the mortgage being signed at closing. My father’s name will not go on the deed, and my husband and I file a joint income tax return.

    My question is: are my husband and I going to be liable to report the $250K gift as income?

  8. Please Help says:

    Hello David, I hope this blog is still active. I have a question that I have googled about a 10000 different ways but can’t find the anwser. A friends mother passed away and split all her assets equally in the will between all children… But one of the children is not on the deed to the house. (We are not sure why)… Does the will override the deed? Is this non included child entitled to any of the house?

    • dgalinis says:

      Thank you for your comment. The Will does not “override” the deed. The Will governs what happens to property owned by your friend’s mother solely or as tenants-in-common. So, if your friend’s mother owned the house in her sole name, the Will would govern what happens to the property. The Will would also control what happens to your friend’s mother’s share of the property if she owned it as tenants-in-common with other people. This is rare. The more common form of joint ownership is called joint tenancy or joint tenants with right of survivorship. If your friend’s mother owned the house with some of her children as joint tenants , then the Will has no bearing on the house as the joint tenants become the rightful owners immediately at your friend’s mother’s death. The Will would have no effect.

      David

      • Please Help says:

        So happy you responded. Unfortunately, That is what I thought regarding the will/deed….I knew (but hoped I was wrong) that the will would triumph. In recent developments it has been found that “supposedly” one sibling (evil, clearly) manipulated a grieving mother into excluding said sibling from house when father passed. Does this believed manipulation have any standing in court? (there are family members who the mother opened up to about her financial/fraud worries before passing due to executor)…in addition, there is suspected theft from legal guardian/executor (my friend is considering a forensic accountant).

        All in all, is he (for lack of better terms) screwed? Should he cut his losses and cease attempt to concur?

        • dgalinis says:

          If your friend resides in Maryland, he or she could potentially bring an action asserting that the sibling exerted “undue influence.” However, these types of cases are often difficult to prove. I don’t have enough information to give legal advice on your friend’s situation. I suggest your friend contact legal counsel in the state he or she resides.

          David

  9. Scott says:

    In June 2012, my mother in Salisbury (MD) died. Right before she passed, as an only child, the house was deeded to me. She and my father lived very modest lives and he predeceased her. They did not have enough income to file income tax returns for more than 15 years.

    The attorney that did the deed said my only tax consequence would be paying the state sales tax on real estate when I sold the house (I asked multiple times). The house sold in February 2013. for $59,000.

    Now I am concerned that the advice we got from the attorney was wrong and that I may have to pay capitol gains tax on the sale and possibly a federal gift tax return should have been filed in 2012 with some tax liability for my mother.

    She had no other assets other than her bank account and I had been listed on her bank account for years.

    I live in Missouri, so any insight you can provide would be most appreciated.

    Thank you.

    • dgalinis says:

      Dear Scott,

      Thank you for your comment. I apologize for the late reply. When your mother “deeded” the house to you, your mother made a gift to you. A federal gift tax return was probably required to be filed by your mother when she made the gift. However, based upon the information you provided, it is doubtful that any federal gift tax was due. There is no Maryland gift tax. You may have been subject to capital gains taxes when you sold the house, if the price that your mother paid for her house was less than the sales price. I suggest you discuss this with your accountant.

      David

  10. Louis says:

    I have a question, about my home in queens NY my mom is 85 and i’m 55 and we both own our own homes, but I was looking to put my name on here deed with her. I’m the one who been doing all work needed as I’m the one who been maintaining it for a long time. my dad and her purchased the house for $1500 back 50 years ago. The house is worth about $300,000 and we both are on star for lower property tax to our incomes being below the star requirerments. Is there a beter way of doing this? I was told I should put both homes into a corparation under a new names as we are both the holders of the corp. thanks Louis

    • Jeff Gordon says:

      Louis,

      I want to thank you for your comment on the blog article “6 Reasons Not to Put Your Child’s Name on the Deed to your House.” My name is Jeff Gordon, and I am an associate attorney with Berman, Sobin, Gross, Feldman & Darby LLP with offices in Maryland, the District of Columbia and Virginia. Please understand I am not a licensed attorney in the state of New York and you should not rely on this response as legal advice. I recommend you speak with local counsel in New York before taking any action regarding this unique issue you have presented.

      Before doing anything, you and your mother should sit down and determine what are each of you really trying to do with the properties? Are you looking to avoid probate? Are you trying to minimize current tax liability? Future tax liability? Once you and your mother both have an understanding of what it is you want to achieve, then I recommend each of you sit down with a local attorney to decide on the best option for planning for the disposition of the property and the consequences that may result.

      Please take a second look at Section 3 (Exposure to Creditors) and Section 5 (Capital Gains Tax) of the blog in which you responded.
      By becoming a joint owner of the property, you expose your mother’s property to any of your creditors. Additionally, by having your name added to the Deed, your basis in the property will be the same as your mothers at the initial purchase ($1500), thereby making you liable for a substantial capital gains tax if the property is ever sold.

      If you and your mother decide to contribute your respective properties into a corporation, I am concerned that the transfer might disqualify you from the STAR program for failure to meet the eligibility requirements. Take a look at The New York State Department of Taxation and Finance STAR webpage located at http://www.tax.ny.gov/pit/property/star/eligibility.htm. The website provides some helpful information regarding the STAR program to help you and your mother avoid taking any action that may cause you to lose the right to the exemption.

      Proper planning can minimize costs without affecting the STAR Program exemption statuses of you and your mother.

      Thank you again for your question.

      Jeffrey K .Gordon, Esq.
      jgordon@bsgfdlaw.com

  11. debbie says:

    my mother has left her house to me and my sister she is first on the deed then me does that give her the right to sell it or force me out of the house we both live with my mom right now but once she passes away where do i stand

    • Dear Ms. Barger:

      Thank you for commenting on the Wills for Working Families blog article “6 Reasons Not to Put Your Child’s Name on the Deed to Your House.” I am an attorney in the Estates and Elder Law practice group and it appears as though you have the following questions:

      1) When your mother passes away, could your sister could force you out of the home?
      2) Could your sister sell the home you both share when you both are listed on the deed?

      Initially, you mentioned that your sister was named first on the deed. The order of names on the deed does not determine the rights of the individuals named. Therefore, to determine your rights you must look to the deed to find out how the property is titled. There are two common forms of ownership, called joint tenancy and tenants in common.

      Determining Joint Tenancy and Tenants in Common
      If the deed to your mother’s property says “joint tenants,” “jointly,” or “joint tenants with rights of survivorship,” you have a joint tenancy. In this situation, you and your sister own the home in equal shares (i.e. 50%) and with rights to possess the whole property. If the deed simply lists two or more people then it is presumed that they are “tenants in common.”

      Transfer of Property Upon Your Mother’s Death
      The distinct difference between a joint tenancy and a tenant in common is the right of survivorship. Under a tenancy in common, if your mother is still named on the deed when she passes away, your mother’s interest will pass under her Last Will and Testament, or to her heirs at law if she does not have a Will. Therefore, if your mother has no estate plan and there is another heir or if your mother devised her interest in the home to someone else they too will have rights to the property.

      Under a joint tenancy, when a person passes away, their interest is divided among the surviving joint tenants. Therefore, the remaining co-owners become owners and your mother’s interest in the property is automatically transferred without the need for probate, no matter how your mother directs the property to pass in her Will, if she has one.

      Access to Property
      In both types of ownership, you each have equal rights to the entire property. Thus, you each have a right to equal access to the entire property and neither of you can deny the other access to the property. Therefore, your sister could not force you out of the home.

      Sale of Property
      The same procedure for selling the home applies to both a joint tenancy and tenants in common. If you both cannot agree to sell the home, the person that wants to sell can only sell their interest in the home. In your situation, if your sister found a buyer who wanted the entire home and you did not agree, your sister could petition the court for a forced sale, which would involve the sale of the whole property. Alternatively, your sister could also file a partition suit, seeking the courts assistance in dividing the home, selling only her interest and you would receive a profit of sale that is relative to your interest in the property. However, for practical reasons, a partition suit is most common with land than with a home.

      Nicole A. Slaughter
      nslaughter@bsgfdlaw.com

      As you know, you have not retained us for assistance with this matter. Thus, my responses to your question do not constitute legal advice and do not create an attorney client relationship. If you need further assistance please feel free to contact me.

  12. Carol C says:

    will a nursing home take my house if my children are not on the deed?

    • dgalinis says:

      Dear Carol,

      Thank you for your comment and I apologize for the late reply. Your question is a little confusing. Generally, nursing homes don’t take people’s houses. In Maryland, if Medical Assistance (i.e., Medicaid) has paid for your nursing home care, they may assert a lien against your house. They do not “take” your home, but have a right to be repaid what Medical Assistance paid on your behalf when the house is sold.

      David

  13. Abbey says:

    My friend has a home and want me to take over the payments and she just walk away from it. Should I have her add me on to the deed if I agree to take it over the loan in the event of her death. And should we notify her mortgage company?

    • dgalinis says:

      Dear Abbey,

      Thank you for your comment and I apologize for the late reply. If your name is not on the deed you have no legal right to the property. In order for you to be on the deed, you will be required to not only notify the mortgage company but get their consent. Most likely, the mortgage company will only agree to this if you qualify and agree to execute a new mortgage.

      David

  14. Patti says:

    We have a home that we bought for our son. We have a mortgage and he pays it. He is on the deed with us. If we sell it for a profit and he turns around and buys another home, do we have to pay capital gains? We paid $63,000 and are asking $120,000. He is looking at buying one for about $120,000.

    • Dear Patti:

      Thank you for your comment. I am an attorney in the Estates and Elder Law practice group. You asked whether you will have to pay capital gain taxes for the home you purchased for your son.

      Yes, you will have to pay capital gains tax on any amount over the original purchase price. In this scenario, if the home was purchased for $63,000 and if you sell the home for $120,000 and assuming there are 3 people on the deed, you will each will have to pay tax on the capital gain of $57,000.

      However, the owner who has resided in the home for the past 2 years out of the previous 5 years before the sale, and did not claim the exclusion within the prior 2 years may exclude up to $250,000 of capital gain. Therefore, if your son is the only owner residing in the home and meets the requirements, he may exclude his share of the capital gains tax.

      As you know, you have not retained us for assistance with this matter. Thus, my responses to your question do not constitute legal advice and do not create an attorney client relationship. If you need further assistance please feel free to contact me.

      Nicole A. Slaughter
      nslaughter@bsgfdlaw.com

  15. Pam says:

    My daughter has lived in my house as a renter for 3 years. I now want to either give her the house or put her on as a joint owner. What are the tax consequences for me and for her? What do you advise is the best way to give her a secure home? (I have my own home where I live and do not depend on this other house for any future gain.)

    • Jeff Gordon says:

      Dear Pam –

      Thank you for your comment. Based on the limited facts provided, I cannot properly advise you on the relevant tax consequences that might be involved with a transfer of ownership to your daughter.
      There are a number of methods to consider using when transferring an ownership interest in the property to your daughter (sale, gift, bequest, Trust, business entity ownership, installment agreements, and etc.). The potential tax consequences for both you and your daughter will depend on the method chosen. One method may greatly impact your present income tax liability, while another may only minimally impact your present tax liability while opening the door for your daughter to face a harsh tax liability down the road.
      If you simply wish to gift the property to your daughter outright or as a Joint Owner during your lifetime, please take a second look at the blog article “6 Reasons Not to Put Your Child’s Name on the Deed to your House”, specifically, sections 4 and 5. These paragraphs provide a brief overview of the potential tax consequences associated with “gifting” the property to your daughter.
      I would recommend you sit down with a tax professional in your area to determine the goals you wish to achieve by transferring the property to your daughter. If your main concern is minimizing tax liability and you are located in Maryland or the District of Columbia, please feel free to contact my office at (301) 670-7030 to sit down and discuss your options.

      Kind Regards,
      Jeffrey K. Gordon, Esq.
      481 N. Frederick Avenue Suite 300
      Gaithersburg, Maryland 20877

  16. Annie alvarez says:

    My mom just passed away 4 sisters on deed 2 passed away but one sister had 8 children do we been to pass there mom’s portion

    • Jeff Gordon says:

      Dear Annie –
      Thank you for visiting the blog and providing your comment. I am an attorney with our Estates and Elder Law Practice Group. We represent clients throughout Maryland and the District of Columbia.

      The issue you have presented depends on how the property is titled and where the property is located. Based on the facts you provided, it seems that you and your sisters were all included on the deed as Co-owners. How the deed categorized the owners will control whether your sister’s children are entitled to an interest in the property.

      The use of the term “Co-owner,” is a bit misleading. These Co-ownership interests are actually considered concurrent estates or Co-tenancies. In your situation, there are two types of Co-tenancies in play: Joint Tenancy with Right of Survivorship and Tenancy in Common.

      Joint Tenancy with Right of Survivorship
      If the deed to you and your sisters includes the words “Joint Tenants,” “jointly” or “with Rights of Survivorship,” then you most likely have a Joint Tenancy with Right of Survivorship. In Maryland, the deed must state the words “with rights of survivorship” to create a valid Joint Tenancy. Assuming the deed creates a Joint Tenancy with Right of Survivorship, then after one owner dies, his or her interest in the property will cease and the remaining owners’ interests in the property will increase.

      Applying Joint Tenancy to your situation, each sister was given a 25% interest in the property at the creation of the deed. Upon your sisters’ deaths, you and your sister now have a 50% interest in the property. Therefore, your deceased sister’s children do not have any interest in the property.

      Tenancy in Common
      If the deed did not create a Joint Tenancy with Right of Survivorship, then a Tenancy in Common was created. Each owner holds a percentage ownership in the property that is freely transferable. You can sell the interest, give it to your children during your lifetime or at your death, etc.

      Applying Tenancy in Common to your situation, upon your sister’s death, her 25% interest is split among her heirs. Therefore, you and your living sister now share ownership with your sister’s heirs. This also applies to anyone who inherited from your other deceased sister as well.

      Final Thoughts
      Before taking any action, you need to review the deed in relation to the real property statutes of the state in which the property is located. If certain language is required to create a specific type of ownership, the inclusion or exclusion will control which type of ownership was created.

      Jeffrey K. Gordon, Esq.

      • Annie alvarez says:

        From California the deed has all names nothing else

        • Jeff Gordon says:

          Annie –

          As I am not licensed in California, I cannot advise you on California law. I recommend you speak with a real estate attorney located in California. He or she will be able to clearly identify the type of ownership created by the deed and answer any other questions you might have regarding the property. Thank you again for your comment.

          Jeff

  17. nali says:

    my dad died and the house is on my mums name but if my mum dies what rights do we five kids have

    • dgalinis says:

      Thank you for your comment. Please see Ms. Slaughter’s response to a comment on this blog dated 4/25/14 for an in depth analysis of the various ways that the house can be distributed based on the language in the deed.

      David

  18. novatn says:

    If we are purchasing a home with cash, in a state other than our own, and include our adult child’s name to the deed (this would be her main residence), wouldn’t this allow our child to inherit this property without probate? Also, if she wants to purchase our shares of the home completely, would this not make for an easier transfer of sale, that is if we hold her mortgage?

    • Jeff Gordon says:

      Dear Novatn,

      Thank you for your comment in response to the blog article “6 Reasons Not to Put Your Child’s Name on the Deed to your House”. The simple answer to your first question is Yes. By simply titling the property to include your adult child’s name on the Deed you can effectively avoid probate. Please take a look at the article to which you responded titled “6 Reasons Not to Put Your Child’s Name on the Deed to your House” for a discussion on the issues associated with adding your child’s name to the Deed.
      In regard to your second question, there are many factors associated with advising on this type of matter which are outside the scope of this blog article. Before you take any action, I would recommend speaking with an attorney licensed in the state where the real property is located. If the property is located in Maryland, feel free to contact my office at (301) 670-7030 to discuss the proposed transaction.

      Kind Regards,

      Jeffrey K. Gordon, Esq.

  19. Father passed away leaving 5 adult children on the deed as joint owners. One of the siblings currently resides in the home with her husband who cared for the father until his death. There is another sibling that has a spouse. All siblings want to sell the home and divide equally. My question is do the two spouse have any say on what happens to the property and can a older sibling get a reverse mortgage and buy the others out and retain the home. The home is paid for and there are no liens on the property but one or more of the siblings may have liens against them.

    • Jeff Gordon says:

      Clarence –

      Thank you for your comment. Please note I have limited my discussion to ownership by Joint Tenants with Right of Survivorship. In the event Tenancy in Common is involved, please speak with an attorney licensed in the state where the property is located.

      Regarding the use of a reverse mortgage to buy out the interests of the other owners, the answer is yes. If one of the owners wishes to specifically buy the interests of the other owners, he/she is free to do so. A reverse mortgage or refinance can achieve this goal. The main potential problem will be making sure that the other owners consent to creation of the mortgage. As the loan obligation will be secured by the property, all of the owners must agree to create the loan. Only one person may actually be obligated on the loan, but the other owners must consent to the lien being placed on the property.

      As for your question about the spouses, unless the spouses are on the title as owners, the spouses do not have any rights to the property. The only people who can consent to the sale or authorize a lien to be placed on the property are the owners of record. In your situation, the owners of record appear to be the five siblings that are now joint owners.

      I hope this discussion is helpful. If you are located in Maryland or the District of Columbia, please feel free to contact me directly if you wish to discuss in further detail.

      Thanks,

      Jeffrey K. Gordon, Esq.
      Jgordon@bsgfdlaw.com

  20. Gary says:

    I am gifting funds to my son (not married) who has a 6 month old son so he can buy a house. My gift will be 90% of the home’s purchase price. I will not be on the mortgage loan which will be comparatively small in comparison to the down payment. I do not want my grandson’s mother to ever have an opportunity to have rights to the home. Should I place myself on the deed? What are the pro’s and con’s of doing so?

    • Jeff Gordon says:

      Gary –

      Thank you for your comment. I apologize for the delayed response. If your grandson’s mother’s name is not on the deed, she has no legal right to the property.
      Before adding your name to the deed, I recommend you speak with an estate planning attorney in your state. If you are located in Maryland, please feel free to contact me. Depending on your estate planning goals, adding your name to the Deed could be a viable option. However, as stated in the article, adding your name or another person’s name to the deed could have unintended negative consequences. Please take a second look at the article to determine whether these issues are of concern to you. If so, then speak with an estate planning attorney. He or she will be able to provide you with several options to accomplish all of your estate planning goals.

      Jeff

  21. mary gagliano says:

    I my husband and children have lived with my mother and paid 1/2 the mortgage for 8 years. Hers is the only name on the deed. should she need long term care can Medicaid put a lien on the house.
    Should we now compile proof of residency for the last 8 years as well as proof of contribution to the mortgage and put my name on the deed so that if she should need long term care we don’t loose our only home for 8 years?

    • Jeff Gordon says:

      Mary –

      Thank you for your comment to our blog article. I apologize for the delay in responding. In Maryland, if Medical Assistance (i.e., Medicaid) has paid for nursing home care, Medicaid may assert a lien against your mother’s home. Medicaid is entitled to repayment on services rendered for Medical Assistance paid on your mother’s behalf when the house is sold.

      Due to the facts you have provided, I recommend speaking with an attorney licensed in the state where the property is located to determine what options are available to you. You may may be able to minimize the impact of long term care on your mother’s estate if appropriate steps are taken while she is not receiving any long term care benefits. If the property is located in Maryland, please feel free to contact my office at (301) 670-7030 to discuss in more depth.

      Thanks,

      Jeff

  22. nick sledge says:

    my mother added my brother the deed before she pass she told him the home was his are the other sibling in titled to the estate.

    • Jeff Gordon says:

      Thank you for your comment. Please see Ms. Slaughter’s response to a comment on this blog dated 4/25/14 for an in depth analysis of the various ways that the house can be distributed based on the language in the deed. Depending on how the house was titled, the other siblings may or may not have any interest in the house.
      Regarding your mother’s estate, there are two types of assets – (1) probate assets and (2) non-probate assets. If your mother died with a Will, then the Will controls how the probate assets will be distributed. If she died without a Will, then the intestacy laws of your state will control. All assets that are considered, non-probate assets will be distributed in accordance with the type of ownership or the estate planning strategy used to avoid probate.

      Jeff

  23. Bob Vaile says:

    Hi,
    Similar question as some above. I have 3 siblings that our Mother put on her deed. She passed away last year, we sold the house. Original purchase price was 105,000.00 we ended up having to sell for 92,000.00 with market down and then realtor fees out of that. Would we take a loss on the sale?
    Thanks

    • Jeff Gordon says:

      Bob –

      Thank you for your comment. While a home is considered a capital asset, generally, you cannot claim the loss for items that are for personal use. If the three siblings converted the property to investment property prior to the sale, they may be able to claim the capital loss. However, even if the loss is available, the loss must be off set against long-term capital gains. The individuals would not be able to claim the loss against ordinary income. I recommend you visit the Internal Revenue Service website for a more detailed discussion regarding capital gains and losses (http://www.irs.gov/taxtopics/tc409.html).

      Jeff

      • Julie says:

        Hi, a general question related to this topic- can your parent just put your name on the deed to their house or are you required to sign something to make that happen? My widowed mother has sent me a quit claim deed on the house she bought a couple of years ago and I do not recall signing anything or knowing about it. (She may have had me sign something, but I’ve only been in her town a couple of times since she bought it, so it seems unlikely.)
        In reading the article, other than potential tax liability, are there other downfalls to the person added to another’s deed? This news disturbs me greatly. I only know about this because she sent the QCD in order to apply for a reverse mortgage, something else that I am very concerned about for her circumstances. But that’s another can of worms. 😉

        Thank you,

        • Jeff Gordon says:

          Julie,

          Thank you for your comment. Generally, yes. Your mother has effectively given you a gift of the property. You could refuse the gift, but you probably are unable to at this point as a fair amount of time has passed. Without knowing all of the facts surrounding your individual situation, the major concerns for you are the later potential tax issues associated with a future sale. Should you default or enter bankruptcy etc. your mother’s home is now fair game for your creditors. The reverse mortgage could cause additional issues down the road but they are beyond the scope of this article.

          Jeffrey Gordon

          • mark says:

            My dad had my name and sisters name added to his home prior to his death, he paid 20,000.00 to build it, we sol it three years after his passing will we be subject yo paying capital gains here in wva

          • Jeff Gordon says:

            Mark,

            Thank you for your post. Please note I am not licensed in West Virginia and I recommend you speak with an attorney in West Virginia to address specific issues. Generally, the answer is it depends. Upon the date of your father’s death, the property received a step-up in basis. For example, while your father paid $20,000 originally, if the property had appreciated to $100,000 as of the date of his death then the basis in the property on that date is stepped-up to $100,000. If you sold the property for $100,000 then there is no capital gains. If the property continued to appreciate in value, then you will most likely be subject to capital gains taxes. There is a personal residence exemption. In order to qualify, the seller must reside on the property for two of the past five years. This exemption allows for up to $250,000 in capital gains to be exempted. I recommend speaking with an attorney in West Virginia to determine if you qualify.

            Respectfully,

            Jeffrey Gordon

  24. china says:

    My dad and his mom purchased a home 42 years ago they are both on the deed my grandmother died, my dad has lived in the home since date of purchase. He has a sister there was no will who does the home belong to.

    • Jeff Gordon says:

      China –

      Thank you for your response to our article. You will need to review the deed to determine whether the property was titled as Joint Tenants with Right of Survivorship or Tenants in Common. Please read an earlier response to this article provided by Nicole Slaughter dated April 25, 2014 for a detailed discussion of Joint Tenancy versus Tenants in Common.

      Thanks,

      Jeff

  25. mike ritz says:

    My father and mother own a dairy farm and roughly 450 acres in NY. I,m a partner, but he would like to have my name and my wife’s name put on the deed. I,m already in the will to receive this. Would it be better to wait or go ahead and have our names put on the will.r

    • Jeff Gordon says:

      Mike –

      Thank you for your response our blog article. I am not licensed to practice in New York, so I cannot advise you one way or the other regarding the best scenarios. I recommend you speak with a New York attorney regarding the pros and cons of adding you and your wife to the deed. You should speak with an attorney regarding not only the real property as it is currently titled but also the business consequences associated with the transfer. There are other planning options that might be more attractive and better suited for this situation than simply adding names to a deed. Specifically, if the property is not actually owned by the company you may be opening yourself up to personally liability should any claims arise out of the operation of the dairy farm on the land. Without more facts regarding the actual dairy farm operation, I can only recommend speaking with a licensed New York attorney that handles both business and real estate matters.

      Thank you,

      Jeff

      • Louis says:

        Hello Jeff I’m not sure if this help forum is still active, but I have a question. My mother and father were together on the deed of there home, but my father passed away in 1996 leaving the house in my mother’s name, but the good this the mortgage had been paid off years back. My mother she’s getting up there in age 87 yet although she’s still very active I would like be able to start planning got the bit something does happen although we would love our loved ones to live forever unfortunately it doesn’t work that way . Anyway I own my one home also and my mortgage had been paid off since 2000 and I’m 57 years old, but we live in separate homes but down the block from each other and I’m constantly keeping an eye on her every day. I was looking into putting my name as joint owners on her deed, but I found out in New York that she could lose her senior citizen discount on the taxes if my name goes on the deed. My question is, is there a way I can do this without her losing her senior citizen tax benefits, I’m only doing this so there will be no hassle with probates or if she someday needs to go into a nursing home because I heard the state will look to take a home if she does need to go into a home. thank you Louis

        • Jeff Gordon says:

          Luois,

          Thank you for your comment. I am not licensed in New York. I recommend you and your mother speak with an estate planning attorney in New York to ensure that any planning options used do not violate the preferential tax treatment you mentioned. There are many types of planning vehicles available (i.e. Wills, Trusts, Joint Ownership, Beneficiary Designations and etc.), a capable estate planning attorney can advise you and your mother on the best means of achieving your mother’s estate planning goals.

          Respectfully,

          Jeff

  26. Pam Baldwin says:

    Dear Mr. Galinis,

    After my dad passed, mom retained their house, still making payments, etc., even after remarrying and moving to her new spouse’s home. Well over 5 years ago, my brother got on the deed and mortgage (not sure if there was a refinance). Two years ago mom’s husband passed, and she was evicted. I set her up in an apartment. My brother then had her remove herself from the deed. He had been living in the house alone for years, so it had essentially become his home. Her name may still be on the mortgage. Mom now may need Medicaid assistance. Is this house going create an issue? It was jointly owned for over 5 years, but she gifted her half to him, I guess.

    • Jeff Gordon says:

      Pam,

      Thank you for your comment. I apologize for the delay in responding. Medicaid has a five year look back on gifts. So any gifts made within five years of applying for Medicaid are included as a countable resource. When she deeded her interest to your brother, the five year look back began to run. In this case, should she need Medicaid assistance, the house would be considered a resource for approximately the next 2.5 – 3 years. There are many other things to consider with regard to Medicaid, so I recommend you and your mother speak with an attorney in your jurisdiction to assist with planning for and applying for Medicaid assistance.

      Respectfully,

      Jeffrey Gordon

  27. Jim Krozek says:

    My mother passed away and had put my oldest brother on the deed for her 120 acre farm, initially she had him on 40 acres that included the house only and the 3 other children on the working 80 acres. She changed and put his name on all 120 because 2 of the children she was afraid may have legal problems and wanted to protect the property with the wish that the 80 would be split among all the children when she passed, no will was made. Does the property automatically transfer to the brother on the deed with no rights to the other children? Or will it need to go through probate? What about the property within the home and other assets?

    • Jeff Gordon says:

      Jim,

      Thank you for your comment. I apologize for the delay in providing a response. Your questions involve an issue previously discussed regarding how property is titled. Please take a look at the response provided by my colleague, Nicole Slaughter, on April 25, 2014. The actual title of the real property will control whether it passes through probate or outside of probate.

      Regarding the items in the home and other assets, I cannot provide any detailed guidance as I am not privy to your mother’s estate plan. Generally, personal property and other assets that are owned individually by your mother without any type of beneficiary designation will pass according to her Will through probate.

      I recommend speaking with an estate administration attorney in your jurisdiction to address your concerns in more detail. If your mother was domiciled in Maryland or DC, I am happy to speak with you.

      Respectfully,

      Jeffrey Gordon
      Jgordon@bsgfdlaw.com
      301-670-7030

  28. Alice koch says:

    My mom needed to move to another state and could not qualify to buy a home. I cosigner the loan and my name was put on the title at the time of purchase. I needed to protect the asset because of my liability for cosignING the home and sometimes making a payment. What should I do now.

    • Jeff Gordon says:

      Alice,

      Thank you for your comment. Based on the facts you provided, it appears you are on the Deed. Are you on the Deed as a Joint Owner with your mother or are you listed as the sole owner? If both of you own the property, then both of your creditors can potentially attach to the property. If you are the sole owner, then only your creditors have access to that property. If you want to minimize the potential liability, there are many options available. I recommend you speak with an estate planning attorney in the State where the property is located to determine what options are best in that jurisdiction. If the property is located in Maryland or Washington, DC, please feel free to contact me via email at Jgordon@bsgfdlaw.com or by phone at 301-670-7030.

      Thanks,

      Jeff

  29. Eric says:

    My dad and I just bought a house together. The deed is in both of our names. He will be living in the house, but I will be paying for and doing all repairs and upkeep. I have 2 siblings. I am wondering what rights they might have to the house when my dad dies.

    • Jeff Gordon says:

      Eric,

      Thank you for your comment. Please see Nicole Slaughter’s response to an earlier comment dated April 25, 2014. Your siblings’ rights will depend upon the type of ownership held between you and your father.

      Jeffrey Gordon

  30. Rick says:

    Sir,
    My mother-in-law placed my wife’s name in addition to the names of her two other children, all adults, on the deed to her house. This was after the passing of my father-in-law. Are there any issues which would make this process a bad idea? I am concerned about liability should some circumstance arise where a law suit is filed? Are there any other concerns we should be aware of? Thank you in advance for your response. Rick

    • Jeff Gordon says:

      Rick,

      Thank you for the comment. I apologize for the delay in responding. I recommend you take a second look at Sections 3 and 4 of the Article. By adding the children to the Deed, your mother-in-law has opened the property up to the creditors of all of the children. The creditors of the siblings cannot go after other assets that you and your wife own but this property is fair game. Also, if everyone decides to sell the property at some point, the siblings have a transferred basis in the property (proportion of mother-in-laws original cash basis) and if the property has appreciated and the siblings have not lived on the property for 2 of the past 5 years, then each child must recognize capital gains in excess of the transferred basis they received.

      If the property is located in Maryland or Washington, DC, I am happy to speak with you in more detail.

      Respectfully,

      Jeffrey Gordon
      Jgordon@bsgfdlaw.com
      301-670-7030

  31. Donna Campbell says:

    Mr. Gordon, I do no see a recent post, so am not sure if this vine is still open. I have looked through above comments and did not see a specific answer to my question. I am a Kentucky resident. My husband and I carried the note for my sons home purchased in June, 2004. My son paid the mortgage payments directly to the bank. Purchase price of the home was $105,000. His name was not included on the deed, although I thought it was. The property taxes were set up in escrow included in the mortgage payment. My son paid those along with making the monthly mortgage payments. I have recently paid the mortgage off on this home and my son and I have a personal note for repayment to me.

    My husband is now deceased. I became concerned that on my death that this home would be considered as part of my estate. I have just transferred by way of a general warranty deed this home to my son in the past five weeks. He continues to pay me for the note he still owes me.

    My question is, do I now claim this on my taxes as a “gift”. I hope I did not do something too hastily and end up costing myself or him money in taxes. Until reading your comments, I was not aware that a “gift” tax might need to be paid. There is a specific note in the deed that states: No Deed Tax – KRS 142.050 7(L) – Parent to child.

    Thank you for your consideration.

    • Jeff Gordon says:

      Hi Donna,

      Thank you for your comment. Please note I am not licensed in Kentucky so I am only able to discuss the potential federal gift tax issues. In the situation you described, it appears you probably should complete a Federal Gift Tax Return. This does not necessarily mean that you will owe any tax on the gift.

      There are two aspects of the gift tax that individuals can use during their lifetime. Annually, an individual can gift away $14,000 per person receiving the gift. During an individual’s lifetime, he or she may gift a total of $5.45 million (2016 Exemption). The return is required to account for gifts in excess of $14,000 and reduce the lifetime exemption amount by the value of the gift in excess of $14,000.

      Unless you have made quite a few gifts of substantial value during your lifetime, you do not appear to be at risk for owing federal gift taxes. Though, I would recommend you file a Federal Gift Tax Return to account for the transaction, just the same.

      Respectfully,

      Jeffrey Gordon

  32. Mary says:

    We put my parent’s house in my name after my father passed away March of 2015 to prevent my brother from taking advantage of my mom. Now we are wanting to sell the house and we want to put it back in her name to avoid capital gains. Is that possible and how would that affect my mom’s taxes? We live in Texas.

    • Jeff Gordon says:

      Mary,

      Thank you for your comment. I apologize for the delay in responding. Based on the facts, you are simply unraveling the original transfer. You need to consider what your mother’s original basis in the property was. She effectively transferred one-half of that cash basis (aka cost basis) to you at the original transfer. You are effectively returning that gifted amount. To this end, each of you needs to file a gift tax return to reflect these gifts. There most likely will not be any taxes owed at this time but with out the actual value of the gifts I cannot be certain.

      Your mother might have to recognize some of the capital gains of the sale but that depends on how much the property has appreciated since she purchased the property and what her cost basis in the property is. I recommend you speak with an attorney in Texas to minimize any complications these transactions may create.

      Respectfully,

      Jeff

  33. Ivan Zarate says:

    Hi me and my girlfriend live with my father in his house that has a mortgage. He has a mortgage for $240000 and the last appraisal was 425000. He wanted to put me on the deed so if he passes I can continue living there. Is this a good idea?. We have lived there over 7 years since he first bought it. We help with the mortgage payments also. Any hp would be greatly appreciated.

    • Jeff Gordon says:

      Ivan,

      Thank you for your comment. I recommend you reread the above post. The reasons above tend to suggest that he should not add you to the deed. Specifically, you have identified a potential gain of almost $200,000 in the event you decide to sell the property later. It appears that you are concerned that the bank will force you to vacate the property in the event your father dies. Based on the Garn-St. Germain Depository Institutions Act of 1982, the bank cannot foreclose or accelerate the loan simply because your father passed away. Assuming you make the mortgage payments and take over the loan, then there should not be any issue. More importantly, you would receive the tax benefits discussed in the article by inheriting the property.

      Respectfully,

      Jeffrey Gordon

  34. November 2014, my parents bought a house and have it in both their names and mine. We chose to live together because they’re in their eighties and I am their caregiver. My mother fractured her femur and we are concerned this might eventually lead to both of them going to live in a nursing home. They have the financial means to go to a nursing home , but my concern is the house. Is this something I need to worry about and eventually have to find another place to live? Their intention is for my to have the house for taking care of them.

    • Jeff Gordon says:

      Tamara,

      Thank you for your post. Generally, no. If they need to qualify for Medicaid at some point in the future, then the house can become an issue. If qualifying for Medicaid becomes a possible option there are certain exceptions that allow for certain transfers to be exempted from the traditional five-year look back. One of those exemptions is the transfer of the house to a child caregiver. I recommend you speak with an estate planning attorney that has knowledge of Medicaid in your state. He or she will be able to provide you with specific criteria and options available to accomplish the goals your parents desire.

      Respectfully,

      Jeffrey Gordon

  35. Cheryl says:

    Question: I purchased a foreclosure with my boyfriend. However, I have a daughter. I put down 75% and he did 15%. Over the months, his true motivation has come out and I’m afraid if anything happens to me, my daughter will be left with nothing. Please advise

    • Jeff Gordon says:

      Cheryl,

      Thank you for your comment. Your question depends entirely on the names listed on the deed to the property. If both of your names are on the Deed, then you will need to determine how the property is owned. My colleague Nicole Slaughter discussed a similar issue in an earlier post dated April 25, 2014. Please take a look at Nicole’s response as it deals directly with this issue.

      Respectfully,

      Jeffrey Gordon

  36. Wanda Jackson says:

    my grandmother and grandfather bought a house in the 70’s. My grandmother died first and my grandfather remarried. My grandfather had two sons and one daughter. My father, his son, and my aunt passed away and my grandfather only have one son left. My grandfather died and his new wife put the deed in her daughter’s name. My question is… Do my uncle, the last son living, have any legal rights to part ownership of the house or do the house belong to my grandfathers new wife’s daughter only?

    • Jeff Gordon says:

      Wanda,

      Thank you for your comment. In this situation, you need to review the deed that was recorded prior to the death of your grandfather. If the deed added your grandfather’s second wife, then the answer is most likely NO. If the property was not titled Jointly or as Tenants by Entirety (see earlier post from Nicole Slaughter), then the next step will be reviewing the Last Will and Testament (or other estate planning documents) of your grandfather. If there is no guidance from these documents (i.e. Deed, Last Will and Testament, Trust or other estate planning documents), then you will need to review the intestacy laws of the state where the property is located to determine what interest, if any, your uncle may have.

      I recommend speaking with an attorney (preferably real estate and/or estate administration background) located in the same state as the real property.

      Respectfully,

      Jeff

  37. Donna says:

    I am in similar situation. #1 When we bought a condo in Boston when our daughter was going to school there we put it as joint tenants with right to survivorship in all 3 names. My husband died. I have done nothing – it is rented as my daughter lives in CA. Can I back her name off the title and then put it in my Florida trust. She is executive and sole beneficiary. She would have no objection. If that is possible I think that would clean things up for when I die.

    • Jeff Gordon says:

      While you cannot unilaterally accomplish the result you discuss, she is able to execute a new deed gifting her interest to you. I am not licensed in Massachusetts nor Florida and cannot advise on if this is an appropriate estate planning decision, but she has the ability to give her interest to whomever she wishes during her lifetime assuming you consent to the new Deed as well.

  38. K says:

    Should a parent put their house in their children’s name to avoid inheritance tax

    • Jeff Gordon says:

      While each state has its own rules, inheritance tax is generally based on the relationship of the parties (decedent and recipient). For example, in Maryland, inheritance tax does not apply to transfers between lineal descendants (i.e. parents, grandparents, children, grandchildren) or siblings. Friends, aunts, uncles, nieces, nephews and etc. are subject to inheritance tax in Maryland due to a further removed relationship from the decedent. I recommend speaking with an estate planning attorney in the state where the property is located to determine what relationships are subject to inheritance tax in said state.

  39. Cynthia says:

    I live in Ohio. I have a warranty deed that list my name and my husband name, husband and wife. If he passes does the home automatically go to me.

    • Jeff Gordon says:

      I am not licensed in Ohio, but generally, Yes. It appears the house is owned as Tenants by Entirety (an option specific to married couples). I recommend speaking with a real estate attorney to review the Deed and ensure that the current title includes a right of survivorship.

  40. Russell Fritz says:

    My sister and I had our names put on the deed to my parent’s house because of medical issues. They bought it about 40 years ago. I’m guessing for about 25k. They are both now deceased.We recently sold it for 92 k. Will we owe taxes on this property. Thank you

    • Jeff Gordon says:

      Short answer, Yes. By receiving the property as a gift, you take a transferred basis ($12.5K each). If you did not live on the property as your primary residence then you will each be responsible for 1/2 of the capital gains associated with the sale of the property ($33.5K each). I recommend speaking with a CPA or a tax attorney in your state to determine what liability if any you may have for capital gains taxes.

  41. Rena says:

    This is kind of this of a tax question. My sister and I were added to the deed to our fathers home. The three of us split paying the property taxes, homeowners and fire insurance. The house is paid for so there is no mortgage payments. The tax question is, because we are now on the deed and owners how do we file taxes. Our father is retired and has not had to file for a few years now. But with our names recently added, I’m not sure what is to be done. Are we required to list it on our tax return that we now own property? The property has two houses on it. Our father lives in one and my sister lives in the other. I currently rent. Very confused on what’s to be done. You advice would sure help us out.

  42. Rena says:

    This is kind of a tax question. My sister and i were added to the deed to our father’s home. The three of us split paying the property taxes, homeowners and fire insurance. The house is paid for so there is no mortgage payments. The tax question is, because we are now on the deed and owners how do we file taxes. Our father is retired and has not had to file for a few years now. But with our names recently added, I’m not sure what is to be done. Are we required to list it on our tax return that we now own property? The property has two houses on it. Our father lives in one and my sister lives in the other. I currently rent but take care of all things with the house my father lives in. Very confused on what’s to be done. Your advice would sure help us out. Thank you.

    • Jeff Gordon says:

      Hi Rena,

      Thank you for your comment. The information that follows is specific to federal taxes. Based on the facts provided, your father should have completed a Gift Tax Return to demonstrate that he gave you and your sister interests in the property. If the three of you decide to sell the property, then you will need to include the property on your individual tax return to account for any capital gain/loss you claim. If you choose to claim certain expense deductions and other beneficial tax treatment from the property as an investment, then yes you will need to include the property on your tax return, as well. I recommend you speak with a CPA or tax attorney in your state to address specific tax concerns related to ownership of the subject property.

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