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Understanding the risks of adding another person to a property deed

by Legacy Plan
November 16, 2023

One of the most common mistakes people make when it comes to property ownership is adding a child to the deed without understanding the risks involved. This can have serious implications down the road, so it's important to be aware of what you're potentially getting yourself into.

When you add an another owner to a property deed, you're essentially giving them a portion of ownership in the property. This means that if anything happens to you, they will automatically become a co-owner of the property. While this may not be a problem if everything goes according to plan, it can cause serious complications if there are any unforeseen circumstances.

For example, let's say you add your child as an owner on your property deed with the intention of them taking over ownership when you pass away. However, what happens if your child gets into financial trouble and is unable to make the mortgage payments? If the property goes into foreclosure, your child's portion of the ownership will be wiped out. Additionally, if your child ever decides to sell their portion of the property, you will have no say in who they sell it to or for how much.

These are just a few of the potential risks that come with adding a loved one to a property deed. While there are some situations where it makes sense to do so, it's important to weigh all of the risks before making a decision.

Complexities of joint ownership

Joint ownership of property can be a great way to share the risks and responsibilities of ownership, but it can also be very complex. There are many different ways to hold title to property, and each has its own pros and cons.

One of the most common ways to hold title to property is as joint tenants with right of survivorship. This means that each owner has an undivided interest in the property and that, upon the death of one owner, the other owner will automatically inherit the deceased owner's interest. This is a great way to avoid probate, but it can have some downsides.

For example, if one owner wants to sell the property, the other owner must agree to the sale. Additionally, both owners are equally responsible for the mortgage, taxes and upkeep of the property. If one owner fails to pay their share, the other owner is on the hook for the entire amount.

Another way to hold title to property is as tenants in common. This means that each owner has a separate and distinct interest in the property. Upon the death of one owner, their interest in the property does not automatically go to the surviving owner, but rather passes to their heirs through their estate.

This also can be a great way to avoid probate, but it can also create some complications as well. For example, if one owner wants to sell their interest in the property, they must find a buyer who is willing to buy the other owner's interest as well. Additionally, both owners are still responsible for the mortgage, taxes and upkeep of the property, even if one owner wants to sell their interest.

Finally, there is community property. Community property is a special type of joint ownership that is recognized in some states. It generally applies to married couples, but can also apply to domestic partners in some states. Under community property law, all property acquired during the marriage or partnership is owned equally by both spouses or partners, regardless of who earned the income to purchase the property.

Community property can be a great way to share ownership of property, but it can also create some complications. For example, if one spouse or partner wants to sell their interest in the property, the other spouse or partner must agree to the sale. Additionally, both spouses or partners are still responsible for the mortgage, taxes and upkeep of the property, even if one spouse or partner wants to sell their interest.

What are the risks of adding someone to a property deed?

Adding someone to a property deed is a common estate planning strategy aimed at simplifying the transfer of assets upon death. However, this approach comes with several key risks that property owners should carefully consider. They include:

  • Loss of control. Once someone is added to a property deed, they become a co-owner. This means that the original owner can no longer make unilateral decisions regarding the property, such as selling or refinancing, without the consent of the added co-owner.

  • Exposure to co-owner’s creditors. If the co-owner has debts or legal judgments against them, the property could be at risk because it is now part of their assets. Creditors may place liens on the property or force a sale to collect on debts.

  • Complicated tax issues. Adding another person to the deed can be considered a gift, which may have gift tax implications if the value exceeds the annual exclusion amount. If the person is added to the deed and later sells the property, they may face significant capital gains taxes because they did not receive a stepped-up basis that would apply if they had inherited the property instead.

  • Impact on eligibility for government benefits. The addition of another person to the property deed may affect the original owner's eligibility for government benefits, such as Medicaid. If the owner needs to apply for long-term care assistance, the property could be counted as an asset, potentially resulting in penalties or disqualification.

  • Potential for family conflict. If there are multiple beneficiaries of the estate, adding just one to the deed could lead to disputes or perceptions of favoritism, potentially resulting in family conflict or contested wills after the original owner's death.

  • Unintended consequences in life events. The co-owner’s personal circumstances, such as divorce, bankruptcy or legal troubles, can affect the property. For instance, in the case of divorce, the ex-spouse of the co-owner may claim a share of the property.

  • Difficulty in changing plans. Once another person is added to a property deed, it can be challenging to remove them without their consent, which could complicate any changes the original owner may wish to make to their estate plan.

  • Joint tenancy issues. If the property is held as joint tenants with right of survivorship, the property will pass to the surviving owner upon the death of one. However, if the other person dies first, their interest may pass to their heirs, which might not be the original owner’s intention.

  • Real estate partition. In some cases, a co-owner might force a partition of the property, which can lead to the property being divided or sold against the original owner's wishes.

Given these risks, it's crucial for property owners to consider alternatives to adding another person directly to the property deed, such as establishing a trust, utilizing life estate deeds or exploring other estate planning tools that can offer a more controlled and protected way to pass on assets. Consulting with an estate planning attorney can help you navigate the complexities and devise a plan that aligns with the owner's intentions while minimizing potential risks.

A living trust can eliminate risks associated with joint ownership

Joint ownership of property can be a convenient option when parents want to add a child as a co-owner. However, it also comes with certain risks and potential complications. To avoid these drawbacks, one alternative strategy is to establish a revocable living trust.

A revocable living trust allows parents to transfer the ownership of their property into the trust while retaining control over it during their lifetime. One of the primary advantages of using a revocable living trust is that it eliminates the potential risks associated with joint ownership.

With joint tenancy or tenancy in common, each co-owner has an equal share and interest in the property. This means that any debts or liabilities incurred by one co-owner can potentially affect the entire property and all other co-owners. Additionally, if one co-owner becomes involved in a lawsuit or legal dispute, it could jeopardize the ownership rights and interests of all other co-owners. By transferring the property into a revocable living trust, parents can maintain full control while avoiding these concerns.

The trust acts as a separate legal entity that holds title to the property on behalf of its beneficiaries. As trustees, parents can dictate how the property is managed and distributed both during their lifetime and after their passing.

Booklet opening animation of our free requestable booklet 'Joint Tenancy and Estate Planning'

Furthermore, another significant advantage of utilizing a revocable living trust is its ability to facilitate an efficient and seamless transfer of assets upon the death of parents. When they pass away, assets held in a revocable living trust can bypass probate court altogether.

This means that beneficiaries can receive their inheritance without undergoing court-supervised procedures that could be time-consuming and expensive. In addition to avoiding probate, utilizing a revocable living trust also offers benefits concerning taxes and capital gains for both parents and beneficiaries.

When transferring assets through a living trust after death, beneficiaries receive what is known as a "step-up in basis," which means that they inherit the property at its fair market value on the date of the parent's death. This can significantly reduce capital gains taxes if the property is later sold, as the gain will be calculated from the stepped-up basis rather than the parent's original purchase price.

Establishing a revocable living trust can be an effective solution for parents who wish to add another person to their property deed while minimizing risks and complications associated with joint ownership. By creating this separate legal entity, parents can maintain control over their assets during their lifetime and ensure a seamless transfer to their beneficiaries upon death.

Additionally, utilizing a revocable living trust offers advantages such as bypassing probate and potential tax benefits for both parents and beneficiaries. Consider consulting with an estate planning attorney to determine if a revocable living trust is suitable for your circumstances.

Are there benefits to adding a child to a property deed?

One of the most significant advantages of adding a child to a property deed is the ability to avoid the probate process upon the death of the original owner. Probate can be time-consuming, public and often costly, which makes avoidance a compelling goal for many in estate planning.

Here's why avoiding probate is beneficial:

  • Speed of asset transfer. Probate can be a lengthy process, sometimes taking months or even years to resolve fully. By adding another person to the property deed, the property can transfer immediately upon the original owner's death, providing them with quicker access to the asset.

  • Cost savings. The probate process can be expensive, with legal fees, executor fees and court costs potentially consuming a significant portion of the estate's value. These costs can be avoided if the property passes directly to the co-owner outside of probate.

  • Privacy. Probate is a public process; the contents of a will and the details of the assets to be distributed become part of the public record. For those who value privacy regarding their estate, transferring property directly to another person can keep these details confidential.

  • Simplicity. Probate can involve complex legal proceedings, particularly for larger estates or if the will is contested. By passing property directly to another person, many of these complexities are bypassed, making for a simpler and more straightforward inheritance process.

  • Reduced likelihood of disputes. Because probate can be a public and sometimes contentious process, it may lead to or exacerbate family disputes. Transferring property directly to another person can minimize the opportunities for such disputes to arise.

It's important to note that while adding another person to the deed can avoid probate for that particular asset, it does not eliminate the need for probate altogether if there are other assets in the estate that must go through the process. Additionally, this strategy should be weighed against the potential risks and disadvantages, such as loss of control over the property, exposure to the other person’s creditors and adverse tax consequences.

Given these factors, property owners should consult with estate planning professionals to determine the most advantageous and least risky ways to achieve their probate avoidance objectives.


Adding another person to a property deed is a strategy sometimes used in estate planning with various implications, including potential asset protection, but it also comes with risks.

On the positive side, adding another person to a property deed can provide potential asset protection. When co-owner is added to a deed as a joint tenant with rights of survivorship, the property typically passes directly to the surviving owner when one dies, without going through probate. This could potentially protect the property from being tied up in legal claims against the estate of the deceased. However, during the lifetime of both parties, the property is usually subject to the creditors of either owner.

Spouses also may own property as tenants by the entirety, which often provides that neither spouse can encumber the property without the consent of the other and may offer protection from creditors if only one spouse is in debt.

Meanwhile, a life estate deed can also offer some protection. The original owner retains the right to use the property during their lifetime, and it passes to the heir upon their death. The life tenant cannot sell the property without the consent of the remainderman (the beneficiary), which might shield the property from certain legal actions.

However, keep in mind some risks and other considerations.

First, there’s exposure to the co-owner’s creditors. Once another person is added to the deed, the property can become exposed to their financial risks. If the other person has debts or legal issues, the property could potentially be seized by their creditors.

Then, there’s a loss of control to consider. The original owner loses a degree of control over the property once another person is added to the deed. This means that major decisions, like selling the property, may require the agreement of the other person.

Tax implications also need to be taken into account. Adding another person to the deed can trigger gift tax implications and may also affect their tax basis in the property, potentially resulting in higher capital gains tax when the property is sold.

Regarding ineligibility for Medicaid: If the property transfer is seen as a gift, it may affect the original owner's eligibility for Medicaid by triggering a penalty period for long-term care due to the program's look-back period.

Family disputes are another potential negative outcome. Such transfers can lead to disputes among family members, particularly if one family member is favored over others.

Therefore, while adding an heir to a property deed might offer some level of protection against legal actions against the original owner, it can also introduce new risks and complications. It is not a step to be taken lightly and should be considered as part of a comprehensive estate planning strategy.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at

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