In my prior blog, it was noted that when title to real property is in the names of both husband and wife or in the name of the purchaser and his/her child or children as joint tenants with right of survivorship, the death of one does not require probate of the real property.
Rushing to prepare and record a new deed to add joint owners without the advice of an attorney can create more problems than it’s worth.
First, if the real property is mortgaged, recording a deed to change the title without the prior written approval of the mortgage holder is generally a default in the terms of the mortgage allowing the mortgage holder to foreclose on the property.
Second, if the property is “homestead” property under Florida law, recording a deed to add children or others to the title may cause the property taxes to be increased. When you have homestead exemption on your primary Florida residence, the first $50,000.00 of property value is tax-exempt. If you add 2 adult children to the title who do not live with you, the exemption would be 1/3rd of $50,000.00.
Also with the homestead exemption, the amount the tax assessor can increase the taxable value is limited t 3% a year. Over time, you acquire increases in value that are sheltered from property
tax. Recording a deed to add anyone to the title, except a spouse, allows the tax assessor to start at current market value for current tax assessments. You have lost the prior shelter built up under the 3% limit.
So unless you have a diagnosis that you will die in the near future, avoiding probate by adding persons other than your spouse to the deed could cost more in property taxes than a probate of your estate would cost.
Another issue to consider is what happens if you add a child or children under the age of 18 years to the title of real property. If the child’s percentage of ownership multiplied by the fair market value of the real property and other assets the parent holds for the minor child total more than $15,000.00, a court guardianship is required.
If a court guardianship is required, then before the property is rented, mortgaged, or sold, the guardian will need to petition the guardianship court for an order authorizing the action.
Even if no activity is done which requires court approval, the guardian is required to file annual financial reports with the court.
In summary, a misguided action of adding a minor to the deed of real property to avoid the cost of probate upon your death can result in incurring legal fees now for representation now in a court guardianship.
Before you sign a deed, check with your attorney first to be safe.