A common question I am asked is whether probate can be avoided if assets are owned jointly with a child. I would like to share just four of the disastrous reasons why you should not add a child’s name to the title of an asset just to avoid probate.
1. If your child is a joint signer on your checking account and they have a judgement against them or a creditor is trying to collect a debt from them, your bank account is now wide open for the taking!
2. If you add your child to the title of your home and they decide to sell the home after you pass away, they will face issues with capital gains tax.
3. When the time comes for you go into a nursing home, the addition of a child’s name to an asset title may be viewed by Medicaid as a gift. Medicaid could penalize you by forcing you to use the asset you were trying to protect, in order to pay for your nursing home care.
4. If the joint owner of an asset, such as your spouse or child, dies before you, you will be left with an asset solely in your name, which will then have to go through the probate process.
5. If your child jointly owns an asset with you, that asset can now be considered a marital asset for them as well! In other words, if they get a divorce, what you thought was only your asset could be given to your child’s ex-spouse through the divorce judgment, which means you lose it!
The only way to avoid the probate process despite life changing events such as death, divorce, sale of assets, or addition of assets, is to have those things properly titled in the name of a trust. Attend one of our free educational events and learn more about how simple it is for you and your family to avoid the probate process, save all of your assets for your loved ones and avoid the expense and hassles of court.
Contact the law firm of Thomas Walters, PLLC, at (888) 787-1913 or for more information, visit www.twestateplanning.law.