Should I deed my house to my children?

Sometimes clients come to me, and looking for a simple way to do “asset protection” tell me that they want to put their property in their children’s names for simplicity.  If you spend any time at all with lawyers, you know that their answer to a question is almost always “it depends”.  Well, in this case it is not “it depends”.  It is DON’T DO IT.  It’s hard for me to think without caveats, well, what if…this or that, THEN is it a good idea?  This is almost always a bad idea.  When you “put it in their name”, you actually give it away.  Totally.  It no longer belongs to you, you have no say, legally, in what happens to it.  Even if your child is the saint who will care for you always, the bank won’t see it that way if you want to re-finance, get a reverse mortgage, or sell it and move.  It’s not yours to sell, leverage, or manage.  What if the child develops a terrible medical condition and needs to declare bankruptcy?  What if there is an accident and lawsuit?  In this time of economic insecurity, unemployment or layoffs are commonplace.  This is now the child’s asset, not yours and it may be available to satisfy their creditors.  What if there is a divorce with no prenuptial agreement?  “YOUR” house may become a marital asset. 

While somewhat more complex to set up, a trust is a better tool for holding your home.  Talk to an estate planning attorney and find out what other options are before you give away the farm.  Literally.


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