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As a financial advisor in Sudbury I am often asked whether adding a child to the title of their home is a good idea. When adding a child to property most people are doing what is referred to as Joint Tenancy, meaning that each owner has an equal and identical interest to each owner. When one of the owners dies, his or her interest is transferred by automatic right of survivorship to the surviving joint owner.

From a tax perspective it has to be determined if the transfer of ownership is a legal ownership or a beneficial ownership. If the purpose of adding a joint owner is to pass directly to the joint survivor when one owner passes away then it must be stipulated that it is a beneficial ownership arrangement. This is done by creating a contract and specifically laying out your intention to gift the property. Because this is a principal residence there are no tax implications upon adding the joint owner or upon death. This is simply a way of possibly avoiding probate. This in itself may open up another can of worms…

A written comprehensive financial plan by a certified financial planner can help ensure that there are no surprises when it comes to estate taxes and probate fees