Dangers of Listing Children on Idaho Assets.

Dangers of Listing Children on Idaho Assets.

While it may seem like an easy way to avoid probate, putting the names of your children on your assets is a dangerous practice.

When you put their names on your bank accounts, brokerage accounts, vehicle titles, and/or real estate here in Idaho, they become joint owners of that property.  In the event of a falling out, this could allow them to take those assets and do with them as they please.  They can legally draw money out of your bank accounts and sell your stocks and bonds.  Though they would not be able to sell your home in Boise, Eagle, or Meridian without your permission, neither would you be able to sell it without their permission.

Putting their name on the title to your assets also exposes those assets to your children’s creditor claims, IRS claims, and the like.  If your child was involved in an auto accident and a judgment was entered against him or her, the person who obtained the judgment would be able to require that your property be sold to pay off that judgment.  And if your children owe any unpaid taxes to the IRS or to the Idaho State Tax Commission, those agencies could also grab your assets to pay your child’s debt.

With a Will or a Trust carefully prepared by an attorney or lawyer, none of these risk exists.

To make matters worse, having the children receive the property by putting their name on title may also cause them to lose certain tax benefits that come through inheriting an asset.  If the asset has appreciated in value and they receive it as an inheritance, they can then sell the asset without paying a long term capital gains tax on the amount by which the value increased since the time that you initially acquired the asset.

On the other hand, if you give it to them apart from an inheritance, they generally receive it with the same “tax basis” that you have in the property.  That means that, when they later sell that asset, they will be required to pay tax on the difference between what you originally paid for the asset and what they later sell it for.  As a rule of thumb, they will be required to pay about 20% of the gain as federal and state taxes on property that you give to them in Boise, Meridian, Star, or Eagle.  On the other hand, if you leave them the asset in a Will or Trust no taxes will be due when they sell the appreciated asset.  And if a Living Trust is used, no probate will be required at the time of your death.

With all of these dangers in mind, for the vast majority of people, it makes far more sense to leave their children off title to their assets.  Instead, leaving those assets to the children in a well-prepared Will or Trust will be safer and could be far less expensive in the long run.

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Whether you live in Boise, Meridian, Eagle, Star, Nampa, or other nearby communities – in fact, anywhere in Ada County or Canyon County – for additional easy-to-understand information on Wills, Trusts, probate, and estate taxes, visit the user-friendly website at http://barrypeters-law.com.  Then call attorney Barry Peters’ offices at (208) 939-2600 for an expedited appointment to begin the process of setting up your own Living Trust.  Or, if you have questions, please call Barry for a free telephone consultation or visit his Q & A pages at http://barrypeters-law.com/common-questions .  As always, your total satisfaction is guaranteed by Barry Peters, Attorney at Law, where all clients receive individual attention to the details of their unique circumstances.