I hear it all the time. "We have 2 grown kids. We are getting older. we want to put the kids on title to our home."

Why does it happen so often? What is the problem?

Mom and Dad own a home. They want to help the kids avoid Probate. That's a good thing to avoid. How can we avoid it? "Let's put the kids on as Joint Tenants. Then when we / I die, they get it automatically without Probate."

TERRIBLE idea!

If Mom puts him on title as a Joint Tenant, when Mom dies Son automatically inherits without Probate.

What can go wrong?

• voluntarily evict Mom;
• force sale of the property; or
• take other adverse actions.

But what about involuntary actions:

• What if Son is DIVORCED and his ex-wife ends up owning a part of Mom's house. The ex HATES Mom. (For years she heard how much better a cook Mom is.) The ex-wife does some of those voluntary nasty things.

• What if Son is SUED (for a business / personal problem) and then Son's creditor seizes Son's half of Mom's house?

• What if Son DIES and leaves his half to his Wife?

• What if Son has an IRS lien?

What is the benefit for Mom? Nothing, unless she dies. Mom's death was the whole point of putting Son on title in the first place: avoiding Probate when Mom dies.

The better way to avoid Probate with no risk to Mom is a Living Trust.

Obviously, if Mom has 3 kids, and puts all of them on title the risks are tripled.

My Grandfather was a lawyer. When I started practicing with him in 1980 he warned me about this issue. Clients would come to him to put the kids on title. He warned them against it. He felt so strongly that if a client insisted on doing it despite his counsel, my Grandfather refused to assist. He sent them away. "If you don't like my advice and want to do it anyway, get someone else to help you. I won't be a party to this mistake."

Personally, I advise clients the same, but if a client insists, I will not send them away. I am not surprised when clients do not listen. I figure after I cover my rear by putting these warnings on paper and having them sign a consent, they are entitled to make their own decisions.

After my Grandfather's death, my Grandmother asked me if she should do the same thing! I told her exactly what her own deceased husband told his clients all of his life: Don't do it! She did. And nothing terrible happened. But with no-risk alternatives (Living Trust), why do smart, intelligent, people who know better continue to do this? Because it cannot happen to them!

2/18/2004:  It happened again!  In early 2001, Daughter urged Mom to Deed to property to Daughter.  I recommended a Living Trust.  Especially since Daughter is in the restaurant business.  Mom said, "No, let's keep it simple.  Just Deed her on as a 50% Joint Tenant."

Mom should have listened to me.  Daughter called TODAY (2/18/2004) and said, "The post-9/11 economy has ruined the restaurant business and I have to file for bankruptcy.  What happens to Mom's home?" 

I told her to check with a bankruptcy expert - not me.  So now we have another factor to add to my list of "Bad Things Happen to Perfect Children List:"  The Economy and/or Terrorism.

4/2004:  It happened again!  In 1999, Daughter urged Mom to Deed to property to Grandson.  He was single (no divorce risk); a CPA for a private company (low risk profession).  Later, the private company went public - almost.  4/2004: The Directors (including our hero) are being sued for $200,000,000.

Gift Tax Issue