Deeds are legal instruments that transfer the ownership of real estate from one party to another. Some people will think that signing a deed would be is the safest and easiest way to transfer real estate to their child when they die.

However, there are many issues with using a deed to transfer real estate as part of your estate plan. What can possibly go wrong if you just use a deed to add your child to a title? 

A child could record the deed while you are alive

One of the big concerns about using a deed to transfer real estate in your estate plan is that you cannot control what your child does with the deed. They must already have it in their possession when you die for the deed to be valid.

If they already have the deed, they could potentially record it at any point. Your child misusing the deed could affect both your living arrangements and your finances. They will officially be an owner, and not only could they interfere with your use of the property, but they could refuse to share the value of the home with their siblings when you die.

Your child could lose the deed

The opposite situation is also a risk. If your child is trustworthy and will hold the deed for years until you die, they might still misplace it. If you don’t have other instructions in your estate plan about handling the home, they may not be able to become the owner of the record without first taking your estate through probate.

Your child could trigger significant capital gains taxes

When someone inherits a property, there are certain laws that allow them to do so without triggering massive taxes. When a child records a deed to a property outside of probate proceedings, they may not receive the same tax benefits. In fact, they could be at risk of incurring significant capital gains taxes.

Thankfully, there are other solutions that can work for transferring real estate when you die. Putting the property into a trust or designating the property as the inheritance of your child in your estate plan can work. Discussing your estate planning wishes and learning more about the law can help you create the best solution for transferring real estate when you die.