Why You Should Think Carefully Before Adding Your Children to Title

It’s a common thought.

“I’ll just add my children to the title now. That way, everything is simpler later.”

On the surface, it sounds practical. Generous. Efficient.

But in many cases, adding children to the deed of your home during your lifetime can create unintended financial consequences — especially here in California.

Before making that decision, it’s important to understand a few key considerations.

1. The Step-Up in Basis

When someone inherits property after the owner passes away, the home typically receives what’s called a step-up in tax basis to its fair market value at the date of death (subject to current tax law).

In plain terms, this often means:

If your children inherit the home and then sell it, capital gains taxes may be significantly reduced — because the taxable gain is calculated from the updated market value, not what you originally paid decades ago.

However, if you add your children to title during your lifetime, you may unintentionally remove or reduce that step-up benefit.

That can result in a much larger capital gains tax bill later.

2. Property Tax Reassessment

Under current California law, transferring property during your lifetime can trigger a reassessment of property taxes — depending on how the transfer is structured.

If reassessment occurs, property taxes could increase substantially.

Given how low many long-time homeowners’ tax bases are, this can be a significant change.

3. Exposure to Your Children’s Liabilities

When you add someone to title, you’re also adding their legal and financial exposure.

If your child were to experience:

• A lawsuit

• Divorce

• Bankruptcy

• Financial hardship

Their ownership interest in your home could potentially become involved.

Many homeowners don’t realize this risk when making what feels like a simple estate-planning decision.

4. Loss of Full Control

Once someone is added to title, decisions about refinancing, selling, or transferring the property may require their involvement and consent.

That can complicate matters down the road — even in healthy family relationships.

5. There May Be Better Options

For many families, a properly structured trust can accomplish the goal of smooth inheritance while preserving tax advantages and maintaining control during your lifetime.

Every family situation is different, which is why coordination between a trust attorney, tax professional, and real estate advisor is important.

Thoughtful Planning Matters

This isn’t about fear — it’s about awareness.

Adding children to title may seem like a shortcut, but shortcuts in estate planning can sometimes create long-term complications.

If you’re considering changes to how your home is titled, I always recommend reviewing the potential tax and legal implications before making a decision.

Because protecting your family’s long-term financial position deserves thoughtful planning — not assumptions.It all begins with an idea. Maybe you want to launch a business. Maybe you want to turn a hobby into something more. Or maybe you have a creative project to share with the world. Whatever it is, the way you tell your story online can make all the difference. 

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