Don't add your adult child's name to your home's deed as an estate-planning shortcut. Their creditors could claim a lien on the house, a divorce could give their ex-spouse a stake in it, and they'd owe capital-gains tax on the sale if the home appreciated from $100,000 to $600,000.
Things you should not do in 2024. Of all the things you should not do in 2024, this one is right at the top of the list. Do not give your home to an adult child. In other words, don't put your child's name on the deed along with yours. I know you're doing that so there'll be a simple transition when you die, but here is the problem. What are you going to do when your child gets into financial difficulties, creditor issues, bankruptcy, A lawsuit gets filed against them. In all of those situations, a lien could be put on your home. Oh, and what are you going to do if there's a nasty divorce and the judge's divorce decree includes your child's share of what you thought was your home? And that doesn't even include the tax issues. If your child is on the deed when you die and they try to sell it, they're going to get hit with a huge capital gains tax. For instance, if years ago you paid $100,000 for that home and then your child sold it for $600,000, They could be paying taxes well over $100,000, and they do not have to.
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