One of the concerns many of the folks I talk to everyday share is how to protect their assets, especially their home as they start getting older. Many people are under the impression that by making their children or other family members co-owners on their home, bank accounts, cars and other assets they are adequately insulating themselves from legal issues. This is generally not true.
Making someone a co-owner on anything such as an account or real estate means exactly that, they become co-owner. So while the transferring individual might be insulating themselves from some liability from their own creditors, they are also opening themselves up to liability from the new co-owner’s creditors. I have witnessed more than one sad case where a child, after being added to the title of a parent’s home, created liability resulting in liens on the property.
The triggering event that leads many people to add their children to a title is a fear of the State coming after property after they have passed on. This scenario most commonly applies to those who use state assistance to cover the cost of nursing care. I cannot emphasize enough the importance of speaking to an attorney who understands these complex laws before making any transfer for these purposes. The state has very specific rules about the timing and effect of these kinds of transfers that can lead to a lot of heartache if left ignored.
Finally, I want to discuss care-giver agreements. It is a fact that most people will require some kind of care in their old age. Much of this care falls on family members. I know many family members who serve their elders selflessly and sometimes thanklessly. Rather than turning over assets to individuals who will provide care, it is better to go through the minor hassle of creating caregiver agreements through an experienced lawyer and getting the proper powers of attorney in place.
Takeaway: talk to a lawyer before transferring away anything for less than its worth.