One small action that can often have disastrous results is a parent decides to add his or her minor child’s name on the title of his or her home. While parents believe this may assist with the settling of their estate, it often creates an estate planning mess. A recent article discusses why this is not a good practice.
In order to add a person’s name to the title of the home, a person will often change the ownership designation of the home to a joint tenancy with the other person. Initially, it is important to realize that not all states allow minors to be joint tenants on a home. Even for those that do, minors in most states cannot transfer assets to others.
This becomes problematic if you’d like to sell or refinance your home. You would most likely have to go through the expensive and lengthy process of appointing a guardian who will protect your child’s interest in the house. A parent who is the joint-owner of a home with his or her child will not be permitted to serve as the guardian, because it would be a conflict of interest. Then, the guardian would have to agree to any sale or refinance of the home.
A better practice would be to create a living trust which names your child as the beneficiary, and designates a trustee to manage and distribute the home according to your wishes. For assistance in planning for the transfer of your home, contact us at (626) 696-3145.