Sometimes people think that the easiest way to avoid probate of this valuable asset is to add someone else’s name as a joint owner of the home. I refer to this as “bootleg estate planning,” and it can be a serious mistake for several reasons. First, once you have added someone’s name to your property, you cannot remove them from title without their cooperation or a lawsuit. A lady I know has been asking her son to quitclaim her home back to her for fi ve years, but somehow he never seems to be able to make the time to do it! Because it is her son, she does not want to sue him to get her property back. Second, as soon as someone else is listed as a joint owner of your property, you have just inherited all of his or her past, present, and future fi nancial problems. Your property is vulnerable to your joint owner’s creditor’s claims. What if your joint owner is a high risk professional, or is in business with an unscrupulous individual? What if he or she causes an automobile accident and is underinsured, or is faced with bankruptcy or IRS problems? What if he or she is involved in a divorce, and the spouse is demanding one-half of the interest in your house?
A separate issue is that you cannot sell or mortgage your home without your joint owner’s permission. You might consider a reverse mortgage as part of your retirement planning but fi nd yourself disqualifi ed, because of your joint owner’s age or fi nancial circumstances.
Many people want to keep the family home in the family. They naively transfer their property to one of their children with instructions to divide the property between the other siblings after the death of the parents. Be aware that if you own the property in joint tenancy with one of your children, after you pass away that one child becomes the sole owner of the property. When that child passes away, his or her heirs (spouse and/ or children) legally own the house. None of your other children or grandchildren has a claim to the property.
Transfers of the family home should only be done as part of estate planning with an attorney knowledgeable in the fi eld. In most cases, the best way to handle the family home is to put it in a revocable living trust. That way you can keep ownership and control of the property and specify what happens to the property upon your death. Smart planning also involves consideration of future issues that might arise among your heirs, such as whether they will sell or keep the house, whether one of them would have the right to live there, etc. Some may want to hold on to the property for sentimental reasons; others might want to get their cash out. These competing concerns often lead to family feuds and, in extreme cases, lawsuits. Your best course is to have a family meeting to discuss these issues, and then follow up with careful estate planning.
© 2019 by Marlene S. Cooper. All rights reserved. (Marlene S. Cooper is celebrating 40 years of practice! Her practice is focused entirely on estate planning, estate administration and probate. You may obtain further information at www.marlenecooperlaw.com, by e-mail at Marlene@ MarleneCooperLaw.com, by phone at (626) 791-7530 or toll free at (866) 702-7600. The information in this article is of a general nature and not intended as legal advice. Seek the advice of an attorney before acting or relying upon any information in this article).