How child's name is added to deed can determine tax consequences

MAILBAG

February 01, 2004

Dear Mr. Azrael:

My husband passed away 10 years ago. The house we own is in his name and mine.

I would like to remove my husband's name from the deed and add my daughter's name to it. Since she is our only child, I have a will that leaves everything to her, including the house when I pass away.

But for tax purposes, I would like her name on the deed along with mine.

I would like to know how I go about doing this.

Dear reader:

After your husband died, you became sole owner of the home. You must sign a new deed to add your daughter's name to the property.

The new deed must be recorded in the land records of the county where the property is located.

Your daughter may be named as a joint tenant with right of survivorship. As a joint tenant, your daughter would own a one-half interest in the home, and she would own the entire property if you predecease her.

As a joint tenant, your daughter would have to agree to sell or mortgage the property.

As an alternative, a new deed could name you as the owner during your lifetime, with your daughter to own the property after your death. As a life estate owner, you can reserve and retain the sole right to sell, mortgage or otherwise deal with the property without your daughter's consent as long as you live.

You should consult a lawyer to advise you on which type of ownership best suits your needs.

There may be tax consequences involved in adding your daughter's name as a joint tenant, since you would be making a gift of a one-half interest in the home. Your daughter also may incur a capital gain tax if she sells the property after you pass away.

A lawyer should explain the tax implications and prepare a legally sufficient deed.

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