Should I Add My Child to My Accounts and Real Estate as Co-owner

My stance on adding children as co-owners is that clients should never add children as co-owners of property. Many clients want to add their kids to title to property in order avoid having the property go thru the probate process once they pass away.

However, adding kids to title usually causes more issues than it solves. Addition of child to property will cause the property to be seen as an asset of the child. If the child ever ends up in trouble Mom and Dad’s assets could be jeopardized because of their kids actions.

There is also the issue of adding one child to property while leaving the others off. I’ve had multiple clients say that they add one child and then trust that once the client passes away that the child gift the other kid or kids their share of the property. There is no guarantee that this will ever happen and many times it doesn’t.

There are also tax consequences of adding a child to property. Depending on value of the property there could be gift tax consequences. The basis (value of the property) will lose its step up so the child may have income tax consequences when they go to sell the property.

If avoiding probate is a big concern of yours, consider setting up a revocable living trust. A trust will accomplish this goal without the headaches and legal hang-ups of adding your child as owner.