To most people, adding their children’s names on property titles seems like a good idea. Joint ownership of property with children is a way of avoiding dealing with probate attorneys and paying inheritance tax. The motivation behind this is that the young ones will automatically assume ownership of the property since they already “own” it. Therefore, a portion of such property won’t form part of the deceased’s probate estate. However, there are certain issues that property owners may face once they add their children’s names to the title of their properties.
Rights Conveyed by Deed
The deed of a property comes with certain rights, which include the rights of possession, enjoyment, exclusion, control, and disposition. These rights are generally referred to as “bundle of rights.” When parents add the children’s names to property titles, they are giving them a “bundle of rights” to that property. Whatever interest that one has in the property is similarly conveyed to the grantee. The transfer may potentially be considered a gift for gift tax purposes by the IRS.
This partial transfer of ownership is irrevocable without the grantees’ consent. Parents consequently cede some control of that property and in case they want to either sell or refinance it, they have to seek permission from the young ones. If this permission isn’t granted, the only recourse is seeking court redress with the help of an Illinois real estate attorney.
Creditor and Divorce Claims
The addition of children’s names to the title of a property means that their share can be subjected to creditor claims. This may include claims from lending institutions, credit companies, and liability claims resulting from accidents.
The property in question can also be in jeopardy in the event that the young ones are faced with criminal restitutions that they are required to pay. If a child who has been added to the deed of a property is going through divorce, the property may be subjected to division since it is technically that child’s property.
It is every parent’s wish to leave an inheritance for his/her children. As desirable as it may appear, adding children to the deed of one’s home may not be worth the risk in the long run. It is advisable to seek legal advice from an Illinois real estate lawyer so that other options can be explored.