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.
- Is your child married? What happens if they get divorced, and now their ex-spouse claims part of your house as a matrimonial asset?
- 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?
- 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.