Should I add my child to the deed before I sell my house?

Once a child is on the deed, they are an owner. A buyer and the title company will need their signature to close, and the child may have to be available, competent and willing. If they disagree or live far away, the sale can stall. If the child has debts or a judgment against them, a lien can attach to their interest, which can complicate your sale. The question usually comes from a good place, such as wanting a child to be taken care of or to avoid probate. But a deed is permanent in ways a will is not. Once a child is on the title, that child's creditors, spouse and own legal problems can touch the house. For a sale, the extra signature is a burden. For estate planning, other tools may fit better. Talk to an attorney before you record a new deed.

The Pennsylvania Department of Revenue lists certain transfers among family members as exempt from state realty transfer tax. The City of Philadelphia says family transfers are generally exempt with documentation. The exemption may not cover every case, and the deed has to be correctly prepared and recorded. Penalties in Philadelphia can reach 50 percent of the tax due if you misrepresent a transaction or fail to record.

IRS Publication 551 explains that inherited property generally takes a basis equal to its fair market value at the date of death. A property you transfer to a child during your life does not necessarily get that same treatment. That could mean a larger taxable gain when the child sells. A tax professional can run the numbers for your case.

Instead of asking whether to add a child, ask what you want to happen. If you want a smooth sale, ask whether you can sell in your own name. If you want the house to pass to a child at death, ask an estate attorney about wills and other tools, and about the tax effects. If you want help managing the sale, ask about a power of attorney, which lets an agent sign for you without becoming an owner. If you are worried about a nursing home or a creditor, ask an elder law attorney, because a deed change can have effects that are hard to undo. Get advice before you sign anything.

If your goal is to sell, it is usually cleaner to sell in your own name. Kaizen Home Buyers buys houses as-is for cash, with no repairs and no agent commission. We make an offer within 24 hours and can close in 14 to 30 days or on your date. Call 267-329-0084. If your goal is estate planning for the long run, an estate attorney can compare deeds, wills and other tools.