Once your child’s name is on the deed, your home becomes an attachable asset to your child’s creditors.  If he/she gets sued or files for bankruptcy, it is an asset that creditors can go after to satisfy outstanding obligations.  Once “the deed is done” it is almost impossible to undo once a lawsuit or bankruptcy is filed.  There are laws which protect creditors, and if you attempt to deed the property back in your name, it can be considered a “fraudulent transfer”.

A much safer way to avoid probating a property is to set up a living trust.  It may cost more than preparing a deed, but your living trust can be drafted to give the home to your child after your death.  This would avoid exposure to your child’s creditors while you are still alive because you will retain full ownership of the home.  In addition, if you are worried that your child may mismanage his/her inheritance, you can create a “spendthrift trust” in your revocable living trust in order to protect against potential creditors.

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Proviso Law Group Attorneys provide guidance on Estate Planning, Probate, Wills, Living Trusts, Trust Administration, Estate Administration, Powers of Attorney, Advanced Health Care Directives and related matters.