southern
indiana
At Mattox & Wilson, we regularly meet with parents who want to make things easier for their children in the future. One of the most common questions we receive is whether adding an adult child to the home deed is a good idea. For many families, the intention is loving and straightforward. Parents want to avoid confusion, avoid probate, or prepare for health concerns. However, the legal consequences in Indiana are significant and can take families by surprise.
This guide explains the most important issues you should consider before changing ownership on your home. Our goal is to help you make an informed decision that protects your property, your future, and your family relationships.
If you need help determining how to best manage your properties or assets, we invite you to call our office at 812-944-8005 to schedule a consultation with an experienced deed attorney.
Adding a child to your deed creates an immediate ownership interest. That interest becomes legally enforceable the day the deed is signed and recorded. In practical terms, this means:
Parents often think they are simply naming an heir. In reality, they are giving away a present ownership interest with long-term consequences.
Yes. Many parents do not realize how vulnerable this decision can make their home. Once your child becomes a co-owner:
If your child is sued, owes child support, cannot pay back debt, or files bankruptcy, their share of the home may be targeted.
Your child’s portion of the home can be considered marital property in a divorce, even if you never intended for their spouse to have a claim.
Removing them from the deed requires their signature. If they refuse, your only option may be expensive litigation.
If you ever need to sell the home to move, downsize, or pay for care, co-ownership may prevent you from acting quickly.
We have seen situations where parents unexpectedly lost control of their property, not because of their own actions, but because something happened in their child’s life. These risks are real and should be taken seriously.
Many families are surprised to learn that adding a child to a deed is considered a taxable gift. You may be required to file a federal gift tax return if the value of the interest transferred exceeds the annual exclusion amount.
While most people will not pay out-of-pocket tax because of lifetime exemptions, the paperwork can still be required. Families sometimes avoid this conversation because it feels uncomfortable, but it is important to know that the IRS views this as a completed gift, not as estate planning.
Yes. This is one of the most important issues families overlook.
Transferring part of your home to your child may be treated as an uncompensated gift. This can result in a penalty period that delays Medicaid nursing home benefits.
Parents often try to plan ahead, but this strategy can backfire and leave them without coverage at the exact moment they need help the most.
At Mattox & Wilson, we help families explore options that protect both homeownership and long-term care eligibility without unnecessary risk.
It can avoid probate, but it usually is not the safest or most effective method.
Yes, transferring your home into joint tenancy with your child will allow the property to pass directly to them when you die. But avoiding probate does not outweigh the loss of control, creditor risk, and potential tax issues created during your lifetime.
There are better tools in Indiana that achieve the same goal without exposing your home to unnecessary risk.
Yes. Adding your child to the deed can create unintended capital gains taxes for them later.
Why this matters
If your child receives the home after your passing through inheritance, they receive a step-up in basis. This can significantly reduce or eliminate capital gains tax if they later sell the property.
However, if you add them to the deed during your lifetime, they take your original basis in the home. This means they may owe substantial tax on the eventual sale, even though the property was a family residence.
Parents often want to leave their children a gift, not a tax bill. This is an important consideration before changing ownership.
Yes. In many situations, better tools are available. We frequently guide families through options such as:
Indiana allows a Transfer on Death Deed, which lets you name your chosen beneficiary without giving up ownership or exposing your home to their creditors. Your child does not receive ownership until after your passing.
A trust keeps the home under your control and avoids probate while protecting against outside claims.
This approach lets you retain the right to live in the home for life while clearly defining who receives it afterward.
Each option has different advantages depending on your goals, your child’s circumstances, and your overall estate plan.
Although we rarely recommend this approach, there are narrow situations where it may be reasonable. These include:
Even when the scenario appears favorable, we still encourage families to look closely at the long-term implications before making a final decision.
Every family dynamic is different. Before adjusting your home deed, it is important to think about:
At Mattox & Wilson, we take time to understand your full situation so we can help you choose the safest and most effective strategy.
Transferring part of your home to your child may seem simple, but the legal and financial consequences in Indiana can be significant. Before you sign a deed, we encourage you to sit down with us to explore your goals and discuss the long-term impact of each option.
If you are considering adding a child to your deed, we can help you evaluate whether it is the right choice and walk you through safer alternatives.
Contact Mattox & Wilson to schedule a consultation and put a plan in place that protects both your home and your family.