Adding an adult child to your deed to your house is not a good idea for a number of reasons. First of all, by doing this you will have to file a gift tax return. If the amount of the gift is under 1 million dollars, you will not have to pay a gift tax, however the return must be filed. The bigger reason not to do this is because you will be subjecting your daughter to a large capital gains tax when the property is sold. Had she inherited the property instead of being put on the deed while you were alive, she would not be dealing with a large capital gains tax due to the fact that the basis in the property would be stepped up to the value at the time of your death. Thus, the capital gain and resultant tax would be much less. Additionally, any creditors of your daughter’s would be able to attach a lien against your house since she is now on the deed.
There are options however to assure that your daughter gets your home while minimizing the tax and creditor concerns. A properly thought out estate plan will assure the proper result for your daughter.
The Law Office of William J. Reinhardt, Jr. has been assisting families with these issues for over 25 years. Call 718-377-8880 or e-mail firstname.lastname@example.org for a free consultation to discuss your plan.
Attend one of my upcoming ESTATE PLANNING SEMINARS to learn more on the proper strategies that may help you preserve your assets for your family.