Question: Is it a good idea to add my son to any of my accounts or even the title to my house?
Answer: Many people decide to add family members such as children to accounts, or a personal residence, for what I think is the perceived sense of convenience. However, any convenience gained is usually outweighed by a number of potential problems: Estate or Gift Taxes: It is possible that joint ownership can trigger gift and estate taxes (if the estate is significant). Adding a family member’s name to title is considered a gift of a portion of the asset’s value. Cost Basis: If a child is added to the real estate title, at the time of the parent’s death, only the parent’s interest will obtain a step up in basis. As such, the sale of the property will more likely result in the triggering of a capital gains tax. Exposure to creditors’ claims: Jointly held property may be exposed to creditor claims. Loss of control: A child who is named on a joint asset has the right to sell his or her interest to an outside buyer (without the consent of the other owner). Even though a buyer would generally not want a partial interest in property, the buyer may then be able to go to court to force a sale of the entire property.
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates. You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.
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