Adding your children’s names to your property titles and other assets may seem straightforward and hassle-free. But the truth often lies beneath the surface, and unintended repercussions can emerge.
Consider the case of Helen Carter. Helen transferred her CDs and house title to her sons while reserving the right to occupy the home for the remainder of her life. She believed this would sidestep probate and possibly aid in qualifying for Medicaid, should the need arise. While her beliefs held some merit, Helen overlooked potential repercussions.
Over time, Helen confronted the reality that she’d surrendered all her tangible assets. Previously, she stood as an independent and self-reliant individual. But now, her dependence shifted to her sons. This new reliance rankled her deeply, leading her to request her property back. While one son, David, complied, the other, Jason, did not. What began as a seemingly simple strategy evolved into drawn-out legal battles and familial discord.
Beyond the evident issue of loss of autonomy, there are other compelling reasons to think twice before transferring all assets to your children or appending their names to your asset titles:
Creditor Vulnerability: If a child is listed on a property title, that asset becomes accessible to their debtors. Suppose David had been responsible for a car accident, resulting in a substantial financial judgment. This judgment would entitle the affected parties to seize any of David’s holdings, including what he inherited from Helen. If he’s listed as a co-owner, creditors could lay claim to his share.
Marital Complications: If David was wedded, his partner could potentially acquire marital rights over the property, especially if it’s intertwined with shared assets. In divorce scenarios, this might entitle his spouse to a portion of what David inherited.
Instead of taking such risks, there are safer alternatives. A revocable living trust is a straightforward method to bypass probate, minus the troubles Helen experienced. And while there may be genuine grounds to bestow assets, like Medicaid planning, transferring assets into a trust is often wiser. By doing so, assets can be shielded from beneficiaries’ creditors and spouses.
Such choices aren’t as black and white as they seem. The McGee Law Firm helps families through these complexities. Book your complimentary consultation today.
From the desk of Attorney Brandon McGee