Older Adults, Look Out for These Two Common Deed Bloopers

What are the most common fumbles older adults make with deeds? Let’s take it from the top.

Number One: Deeding Property to Your Adult Child.

This is classic. To spare the family from probate, a parent quitclaims the family home to the next generation. Let’s get straight to the point:

Bringing children onto the title when you’re alive is not a good estate planning workaround.

As our readers know, a quitclaim transfers a property interest. That would make your child a co-owner. Consider the drawbacks to naming your child on your deed during your living years:

• Your new co-owner will have a say in whether to sell or take a loan out on the home, and must be in agreement for you to take such actions.

• A new co-owner’s debt or court orders could turn into liens on your title. There’s also the risk that your child’s personal relationships could create new claims to your title while you’re still around.

• If your child is still underage when you die, a court-approved guardian will need to be appointed.

The IRS will also be interested in your deed transfer. The IRS sees what you’re doing as making a gift to a non-spouse. (For the tax year 2025, you may only give up to $19,000 to any one person tax-free, without reducing your lifetime gift tax exclusion.)

So, instead, consider the old stand-by: leaving the home in your will. This neatly produces a deed certified by your county probate court, which officially verifies the chain of title. This action also allows for a capital gains tax break if your chosen beneficiary needs to sell the home.

Don’t forget: After making a deed transfer, most homeowners have to wait five years before applying for Medicaid.  

Number 2: Giving Someone a Deed to Keep in Case Anything Happens to You.

Probate can be a costly pain. Why not just give a deed to an heir now, signed and ready to record when you pass?

Not so fast. If there’s no notarization and recording during your lifetime, what happened? Were you pressured into signing your title away? How would your recipient prove otherwise?  

And heaven forbid you forget about the unrecorded deed, and transfer the same home to someone else, and that someone else records the deed. Having no clue that there’s an unrecorded deed lying around, the one who records the later deed in good faith will usually be considered the owner.

Again, let’s get to the point:

A recipient should promptly accept and record a deed. No exceptions. This keeps the chain of title public and clear.

If you want to make sure your deed passes on to your chosen recipient in a clear way, you might consider creating a deed for a life estate. Then you stay in your home for life, although you’ve legally passed your deed. Pro: Life estate deeds avoid probate. Con: You give up control over the title.

Some states offer a newer option to get around probate: a revocable transfer on death deed.

You Can Transfer Your Deed Yourself. Still, A Little Pro Guidance Goes a Long Way.

To lower the risk of deed bloopers, have you met with an attorney and tax specialist? You can create a deed if you need to transfer your property. Yet we recommend consulting a professional to review it.

In regular home sales, the title professionals save transfers from mistakes. When a deed moves outside of a standard home purchase situation, that’s when mistakes are most likely.

Thinking of transferring a property interest now? Deeds.com offers up-to-date forms, with the necessary supplements for recording under state and local rules.

Our math teachers said the simplest way is the best. But when property is at stake, that’s not always the case. Professionals can guide you in a customized comparison of a will, TOD deed, or a living trust.

Important note: This article provides general information and food for thought. It is not meant as, and should not be treated as, legal or financial advice. For questions that impact your legal rights, speak with a local real estate attorney whose guidance fits your individual situation under the law of the state where your home exists.