One thing that some people try to do to avoid probate is to transfer their house to their children while they are alive. For many, it seems like the simplest and easiest solution. This can be accomplished by adding the child to to ttile to the house as a joint tenant or by gifting it to them outright. However, a cautionary tale, that may or may not be literally true, illustrates what can happen when you do this. The story involves a judge who made a big legal error.
The judge’s daughter and her family lived with him for a few years and eventually the judge simply transferred his home to the daughter instead of making a proper estate plan. The daughter passed away unexpectedly. She also did not have an estate plan or a Will. Under the laws of intestate succession, half of the home went to her husband and the other half to her 4-year-old son. A few years later, the husband started dating and forced the judge to move out, leaving him homeless. Because he no longer owned the house, having signed it over, there was nothing that could be done. Additionally, the story goes that the judge did not file a gift tax return when he transferred the house, so he also owed money to the IRS.
The story might not be true, as a judge’s name is never attached. However, it does illustrate one of the many things that can go wrong when you attempt to avoid Probate the wrong way. Another problem is that you could be exposing your home to the problems of your children, e.g., where they have a judgment against them or haven’t paid their taxes. Even a breakdown of the relationship with the child that has been given the house can be trouble as you could find yourself evicted from what you thought was your own home.
Talk to an experienced and qualified estate planning attorney about the proper way to avoid Probate.
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