This question has been asked numerous times. And my answer is – it depends on your purpose.
Most parents, as they get older, would want to add their adult children on title of their home to save on probate fee when they pass. Yes, although it is true that you can “save” on probate fee, but it can cost you more financially and have significant legal impact down the road.
Let’s talk about the benefits. Adding your children on title is a good way to transfer your home to your children upon your death without triggering too much legal cost as the process of transferring the title to the surviving tenant is quite simple. The beneficial interest of the property is transferred to the children instantaneously upon the death of the parents if the property is registered as joint tenants. There is also a tax savings with respect to probate fee of 1.4% of the value of the home.
Seems to good to be true? Perhaps. BUT there are many other aspects you will have to consider. For example, if the children are not residing in the home, they cannot claim the principal residence exemption to capital gains tax on the home. If the property value continues to rise, this tax will be far greater than the saving in probate fees. Another aspect you have to consider is asset protection. As son as you add your children’s name to your home, they are now owners of that home. This means that your children can mortgage their shares (they can do that without you knowing about it), or can possibly lose their share to their creditors if they were ever to be sued. Lastly, if there is a marriage breakdown between your children and their spouses, their spouses could make a claim that your children’s share of the house should be included in the net family asset for division.
Considering all these factors, it might just be better if we just leave things alone as they are.
A bit about myself. I am a member of the British Columbia Notaries Public Society. I want to answer some of the most common questions that my clients have through my blog. Hope you find it useful.