By: Mina N. Sirkin, Esq.
Many clients come into our office wanting to put their children on the title of their home so their real estate avoids probate. This article will address the problems of joint tenancy with your children.
As the economy takes a down turn, we face an even more litigious society than then last two decades. It is now more important to protect oneself against possible lawsuits.
The typical life problems of you children can become yours if you are joint tenants with your children. For example, if your child is in the process of divorce, that child's spouse may claim that half of your home is an asset that is within the court's jurisdiction for marital settlement procedures. Although your child's spouse may generally lose such an argument, this will tie up your home until your child's divorce is final.
If your child is involved in an auto accident without insurance or with inadequate insurance, a judgment against your child's name can result in your involvement. This in turn could result in a judgment lien imposed on your child's half of "your" home.
Creditors of your child will also be able to enforce a judgment lien against your house in order to satisfy your child's debts. This could force a sale of your home against your wishes. Your child's largest creditor(s) may be the IRS or the Franchise Tax Board. If your child has not paid income taxes or has incurred other tax liability, those tax entities may attach a tax lien against any real property in your child's name. Also, a forced sale by your child's creditors may create capital gains and gift tax issues for you.
If your child files bankruptcy to avoid his or her creditors, he or she will have to declare part of your home as his or her assets, and creditors will ask the court permission to sell his or her share of your home to satisfy any debts. This will force a sale of your home and will tie up your home in the courts against your wishes.
Furthermore, once you have put your son or your daughter on title, if you want to sell or refinance your home, you MUST obtain your son or daughter's permission to sell the home. If he or she refuses, you will NOT be able to sell the home without resorting to litigation.
How can you solve these problems? By putting your property in trust, your child will avoid probate, and you will not be affected by your child's financial problems, your child's law suits or divorce proceedings.
Mina N. Sirkin is a Board Certified Specialist attorney in Estate Planning, Probate and Trust Law by the Board of Legal Specialization of the State Bar of California. Ms. Sirkin practices in Los Angeles County, California. MSirkin@SirkinLaw.com. http://www.SirkinLaw.com.
2008 Copyright Mina N. Sirkin. All rights reserved.
Comments