When a house is the lone asset that will be passed on to heirs, it is somewhat common to put it in joint tenancy with rights of survivorship. It is common enough that there is a term for it, and it is referred to as a “poor man’s trust.” While this can work in some cases, it is not recommended for the following reasons:
- Once the deed is executed and recorded, you cannot change it without all parties on the new deed agreeing to a transfer and signing a deed.
- You can create community property complications if you deed the property to a child and their spouse, and they end up going through a divorce.
- If you choose to sell the property, for instance to move to a different city, you can create adverse tax consequences such as capital gains taxes to the person you add to the deed since they are not occupying the home and do not qualify for that exemption.
- If there is any kind of a falling out between you and the person you add to the deed (which may sound like it could never happen to you, but it is in fact a situation that arises frequently) the other party could force the partition of the property (either with a buyout or by selling the property) because they are legal owners of the property.
For these reasons, executing a trust, which is revocable, is recommended as it leaves you the maximum flexibility and protection, while still keeping your property out of probate.
DISCLAIMER: All legal principles quoted are valid as of the date of writing in the State of California. However, you should NEVER base your actions on a legal article, blog, or internet story, as facts in real life are complicated. You should have your case evaluated by an attorney experienced in the area of law needed for your case. In addition, there are often exceptions and potential changes to results that occur due to facts that you may think are trivial or unimportant. This article should not be taken in any way as legal advice on your specific legal matter.
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