Before making the decision to add your adult child(ren) to the title for your primary home, talk to a real estate deed lawyer in Toronto. While the idea to add their name to the deed may come with good intentions, the cons can outweigh the pros.
Here are some reasons why you shouldn’t add you child(ren) to the title of your deed.
After working hard for years to own your property, you would lose legal control of the house. Adding your child(ren) would entitle all parties involved in any decision to remortgage or sell the home. We never know what the future entails. If you want to access the equity, for example, it will have to be a unanimous agreement before any paperwork or finances were issued.
Deed lawyers in Toronto warn against adding a family member to the deed for a variety of reasons, but one of the main ones is that it provides the opportunity for creditors to gain access to the property’s value. If the child(ren) faces debt issue such as credit cards, car loans, and taxes, a lien against the home can be placed as part of their assets.
For the most part, it is a primary residence, homeowners are not responsible for paying capital gains if the value of the property increases prior to being sold. By adding your child(ren) to the deed, large taxation is evident unless the child(ren) named also have it as their principal residence (which is usually not the case). You may not have to pay the tax, but the ones named on the deed will if the property is sold, and they claim another property as their principal residence.
No one likes to think of the negative aspects of marriage, but divorce does happen. In the case of a divorce of the child(ren) named on the deed, the house can become part of the divorce settlement. This entitles the soon-to-be ex-spouse to receive a portion of proceeds relating to the home. In some cases, your home may need to be sold to satisfy the court judgment in financial matters of the divorce.
Life happens. As the economy sees constant interest rate hikes, there is a chance the child(ren) named on your deed may face an unstable financial future. In the extreme case of bankruptcy, the house could be sold to pay the creditors of the child(ren) named on the Title ownership. All legal assets baring the name of said child(ren) are gathered in bankruptcy proceedings, even “gifts” such as adding them to the deed.
One of the common consultation issues real estate lawyers in Toronto are involved in is if the added child(ren) is partied to a lawsuit. Whether they are found at-fault for a motor vehicle accident or sued for a professional or other personal matter, any asset with their name will be involved in the claim. This includes the house and property to which their name is legally assigned to. Their share of your home may be added to the value of their worldly goods.
With the above-mentioned risks, if you are still considering adding your adult child(ren) to the deed of your home, talk to Zinati Kay – Real Estate Lawyers first. We have nearly three decades of experience in the advantages and disadvantages of title ownership and how it can affect all parties involved. Call us today at (416) 321-8766 to book a consultation for professional expert advice.
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