Adding someone to the title of your house may be the easiest big mistake you'll make (updated July 2019)

I encourage the readers of this blog to ask questions for several reasons. The most important reason is that I want to know what's on your minds. I want to know what information you need so that I can figure out what role I can play in getting that information out there.

There are some topics that pop up time and time again, and even though I've answered similar questions many times, I keep answering them. I recently received a question about adding names to property, and regular readers of this blog know that I've talked about that endlessly. But seeing the question asked so casually made me think about how vulnerable many people are. They have no idea how much trouble they are causing themselves and their families by taking legal steps they should simply not take.

Here's a question I received recently:

"How easy is it to add someone to the title of my house? Can it be done at anytime or is this a question that I should be asking a bank?"

Here's what I gather from the question:
1. You expect to hear that it's easy to add someone, probably because you've heard from friends or others that it's easy.
2. You don't realize that you are affecting your own legal rights, as evidenced by the fact that you think this is a question to ask a banker.
3. Your plan is likely aimed at avoiding probate or otherwise involved with what happens to your house on your death, because you came to a blog that's all about inheritance.

Why oh why do people keep adding others to their titles? It DOESN'T WORK. Okay, I acknowledge that there are some good reasons to add a person. Perhaps you have just married and you want to own your marital home in joint names. I'm on board with that. But when it comes to inheritance issues, adding people to titles is almost always the absolute wrong way to go about things. Sure, your friends found it easy to add the kids but wait until those friends pass away and the kids have to deal with the mess left behind. It won't seem so easy then.

Instead of looking at adding a name to your title then making that step fit your goal, do things the other way around. What are you actually trying to achieve? What is the goal? And can it be achieved in some other, better way than risking what may be your largest asset?

Yes, there is risk. A great deal of risk when you add someone to your title. You do realize that "adding" them means you're giving it to them, right? I mean, you can't just remove them later if you change your mind. Keep this golden rule in mind: adding them is easy, but removing them is not.

You can't remove them because by adding them to the title, you've created legal rights for them. You've given them the rights of an owner. The fact that the property is "really" yours will not exist in law. And this is where the risk to you comes in. If the other owner - the person you've added - gets divorced, you could lose your home because it's actually one of that person's assets too. Same for that person being sued or losing a business. You could well lose your home because "adding" someone was easy and you didn't think of the consequences.

This brings us back to your goal. What is it you want to achieve? Is your goal to avoid probate fees? We now know that adding the kids' names to the title of the house no longer works. The house still goes into the estate despite the joint names.

Are you trying to leave the house to the kids? Why not just leave it in your estate and use your will to give the estate to the kids? That avoids creating a tax bill for the kids, and avoids that whole idiotic expectation that several children can own one house together without problems.

I urge you to sit down with an estate planning lawyer before you make any changes to your title. Find out the pros and cons of your proposed steps. Review your goals and find out how they can be achieved more efficiently and safely. Make sure your plans for your home are not made in isolation, as they have to work with your will, your insurance, designations made on your financial instruments, and other variables such as separation agreements.

Making one big mistake - and carelessly adding a name to a title is a BIG one - can mess up your entire estate plan and leave your family with a confusing, costly mess.