A common estate planning arrangement that many seniors have considered is transferring the title of their home to a child. According to a recent article, however, transferring the title of your home is a dangerous proposition.
Put simply, once you transfer the title of your home, the person you transfer title to is the sole and absolute owner. There are many serious implications of not owning the home that you live in. For example, the new titleholder can do virtually whatever he or she wants with the home, including mortgaging it, selling it, and even evicting you. Even if you are absolutely certain that the new titleholder would never take any of the aforementioned actions, you must also consider that their spouse may end up with an ownership interest over your home as well. For example, if the home is considered a marital asset, it could potentially be included in a divorce proceeding.
Moreover, transferring title of your home makes it available to any creditors or judgment holders the new titleholder may have. These creditors could potentially attach your home and sell it off to pay a judgment.
Seniors who are considering transferring the title to their home should first speak with an estate planning attorney about the risks and benefits of such a transfer, and determine if there is a better way to achieve their estate planning goals.