St. Ambrose Legal Services has received an influx of calls from city residents who have been advised to add a relative’s name to their house deed. The common misconception is that adding someone to the deed will protect your home for your heirs. Below are five reasons why adding a loved one to your deed is not a smart way to protect your investment.
- Loss of control– Adding anyone’s name to your deed makes the other person a co-owner of the property. If you decide to sell the property and the co-owner does not agree, then you cannot sell.
- Inheritance by others– If your new co-owner dies before you do, then that person’s interest could pass on to someone else. You could end up owning the house with one or more people.
- Exposure to creditors– Your house is exposed to the debts or your co-owner. Likewise, if the co-owner has tax issues or they are sued and lose, a lien could be placed on your property. A lien on your house could force it to be sold.
- Taxable gift – Putting someone’s name on your deed is legally a gift that could require a federal gift tax return.
- Medicaid Penalty– If you give someone an interest in your home, it could trigger ineligibility for Medicaid benefits in the event you need nursing home care.
Adding a name to your home is risky. The safer alternative is to draft a Will that leaves your property to the person of your choice. Seniors in Baltimore City can get a free Will through the Bar Association of Baltimore City: 410-396-5277.