Can adding children’s names to property create problems?

senior couple

Problems can be encountered when children are made co-owners of property with a parent. In this article, we will look at some of these issues.


Parents add children’s names to accounts for various reasons. It may be so the child can access the account to pay the parent’s bills. Frequently, parents add their children’s names on accounts or deeds to avoid probate. The reason is when someone dies with assets titled just in his/her name without beneficiaries the asset is frozen. Probate is required to access the assets. A Power of Attorney does not work since it is effective only while the creator is living. It is similar to an employer-employee relationship. If an employer goes out of business there are no employees.


In probate, a Personal Representative (executor) is appointed by the Court to administer the estate. Throughout the process of collecting assets, paying bills and finally making the distribution to the beneficiaries, the Personal Representative must show the Probate Court that everything is proceeding in accordance with Florida Statutes and Probate Rules. The word probate essentially means “to prove.” When everything runs smoothly, formal probate takes around six months from the time the petition is filed with the court. There are fees and court costs. For an estate between $100,000 and $1,000,000, Florida Statutes suggest informal administration the reasonable fee for both the Personal Representative and the attorney would be 3% of the gross assets.


This leads many people to ask: “Can probate be avoided by adding children’s names to property?”  Yes, jointly owned property with survivorship rights goes to the survivor. Unfortunately, this simple solution can create other problems: First, with joint bank accounts, the child has the ability to use the funds. Second, with real estate, there is a loss of control. Any further transfer will require the child’s signature on the deed. For example, a widow could add one of several children’s names on the deed to her home. But if later the mother wanted the home to go to all of her children, sell, or mortgage the property, the child could refuse to sign. Third, the property will be exposed to the child’s creditors when held jointly with the child.  Fourth, only one-half of the property will receive a “stepped-up basis.”  In determining the capital gain on appreciated property, the basis (the original purchase) is subtracted from the sales price. When property is inherited at death, the date of death value becomes the basis. This reduces the capital gains tax when the property is sold. Fifth, when a gift exceeds the annual exclusion of $15,000, a 709 Gift Tax Return should be filed with the IRS. Sixth, a home is not counted as an asset by Medicaid, but adding a child’s name on the title is a gift which may impede qualifying for Medicaid benefits. Seventh, with the home the parent may lose some of his/her homestead property tax exemption. Eight, if the child dies first, the property must be probated.


With some types of assets, a Payment on Death (POD) or Transfer on Death (TOD) accounts may be used to avoid probate and not encounter all these problems. Another option is the Revocable Living Trust which can be used with all types of assets and provides for incapacity.


For further information on estate planning, you may be interested in Attorney Truman Scarborough’s Booklet on Estate Planning in Florida. It is available without charge or obligation by calling (321) 267 – 4770. His office is located at 239 Harrison Street, Titusville, Florida.









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