Shall I Put My Home in Joint Tenancy with My Child?

I’m constantly hearing from clients that tell me about avoiding probate by placing their home in joint tenancy with their child. After all, everybody’s doing it!

If you create a joint tenancy in your home with your child, then your child’s problems will soon become your problems. What are some of the potential problems you might face in the future if you title your home in joint tenancy with your child?

The current divorce rate is about 50%. If your child and their spouse end up in divorce, your in-law could claim that your child’s half of the assets is an asset that is subject to division in their divorce.

If your child and their spouse incur any income tax liabilities, watch out. The first thing the IRS will do is attach a lien against any real property in either of their names including the house if it has your child’s name on it.

If your child declares bankruptcy without factoring in the effect it will have on your real estate, you may have forgotten that you gave 50% of your property to them by creating a joint tenancy. When you put your child on title, nothing more was required of them. When your child declares bankruptcy, the creditors come knocking on your door and you may be surprised as now the house is subject to a bankruptcy proceeding.

If your child and your child’s spouse are in a car accident and they don’t have enough liability coverage, the accident victim may go to court to get a judgment lien against your child’s half of your house. The victim could turn this judgment lien into cash by forcing a sale of your home.

If your child and your child’s spouse have creditor problems, their creditors could put a lien on your child’s half of the house. Here again the creditors could force a sale of your home to turn their creditors’ lien into cash.

Once you have made your child a joint tenant to your property and your child subsequently has a creditor problem, your child cannot avoid this debt by simply transferring their share back to you. The creditor can set aside that transfer and take the child’s share to satisfy her debt.