Joint tenancy: to add, or not to add?

I have a lot of clients who ask me about adding a child on title to their property in order to save probate taxes down the road. And to almost all of them, I say that I don’t recommend it.

  1. Is your child married? What happens if they get divorced, and now their ex-spouse claims part of your house as a matrimonial asset?
  2. Does your child run a business? What happens if the business runs into trouble, and your child’s creditors come knocking, looking for their share of your home?
  3. Does your child own their own house? Even if everything else works out fine, capital gains tax for a secondary property is often more than probate tax.

The bottom line: probate tax is often the least of your worries. If you truly want to minimize it, sit down with your lawyer and your accountant and figure out a way to do so that actually makes sense.