Gifts can have serious unintended consequences.

01 – I want to make things simple when I die, so I’ll just add my son to my house title…

Fail.

1: A co-owner isn’t automatically entitled to full title upon death unless certain types of deeds are used. At least in Texas, it is not standard for title companies to use these kinds of deeds when homes are purchased.

2: Your homestead is protected from creditors. But what happens when half of the house is owned by Johnny who has his own homestead (and creditors)?

3: You want to sell or refinance your home. The title company wants something in writing from you and Johnny directing how the proceeds will be distributed. How sure are you that he will agree to give you 100% of the proceeds? How sure is he that you will agree to pay 100% of the capital gains?

You get the point.

02 – I want my daughter to get the house when I die, so I’ll just give it to her now.

Fail.

1: See “Two and Three” from the previous section.

2: Daughter gets divorced. The law says the house remains hers but the legal battle is dragging on and on and on. She either decides to carve up the title to settle the case or has to sell it to cover the legal bills. “But, I still live there!” you say. It will only take one eviction hearing for you to learn how little your estate planning intentions matter at this point.

3: Your daughter is in a terrible accident. She has to go into a nursing facility for a while, possible forever. She doesn’t have enough money to pay $4,500/month to the nursing home for very long. The government won’t pay for her nursing home care unless she sells everything other than her car, homestead and personal belongings. Your house isn’t on the list of things she gets to keep. Even if it is her homestead, once she’s passed, the government may be able to go after the homestead then.

I’m sure your daughter is a lovely person, but things happen. People change. Bad things happen that may make it really inconvenient for someone else to be the legal owner of your property while you are still alive.

03 – Cost Benefit Analysis

There are times when lifetime gifts are appropriate estate planning tools, but you should consult an estate planning attorney to make sure. There are situations where the benefits outweigh the potential consequences, but how sure are you that this is one of those situations?

https://www.avvo.com/legal-guides/ugc/gifting-fails.html