Joint titling may have negative unintended consequences.
You are thinking about what will happen to your things when you pass away.
Some things like life insurance policies are easy to transfer.
You simply need to select beneficiaries.
Other items are not as simple.
According to a recent nj.com article titled “The risks of changing your home's deed,” your home likely falls under this category.
A seemingly simple work around would be to add your adult child as a Joint Tenant with Rights of Survivorship.
What would this do?
Are there downsides?
It can have negative tax consequences.
Only your half would be eligible for a step-up in basis for capital gains when you pass away.
Another potential problem is creditors.
Think divorces, lawsuits, and bankruptcies.
If your child has creditors, they could attach a lien to his or her half of the home.
Another issue could be the need to pay for long-term care.
Medicaid has a five-year lookback policy.
Transfers made within those five years could make you ineligible for Medicaid.
As you consider your options, work with an experienced estate planning attorney or elder law attorney to determine what actions would be best for you.
For example, both Kansas and Missouri law provide for the non-probate transfer of real estate without probate at death by way of a beneficiary deed.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: nj.com (January 29, 2018) “The risks of changing your home's deed”