The decision to add or remove someone from the deed to a home in Missouri is not one to be taken lightly. It can have significant legal, financial, and emotional implications for all parties involved. Therefore, it is crucial to carefully consider all aspects before making any changes to the property title.
Here are some key things to keep in mind when adding or removing someone from the deed to a home in Missouri.
Adding Someone to the Deed:
Adding a family member or a friend to the deed can be a generous gesture, but it requires careful consideration. There are several things you need to keep in mind before adding someone to the title of your property.
Understand the Legal Implications
Adding someone to the deed means that they will have legal ownership of the property. They will be entitled to a share of the equity in the property, and their name will be on the mortgage if there is one. Unless a special agreement is created at the time, the new co-owner would have the right to sell their interest in the property. Therefore, it is essential to understand the financial and legal implications of adding someone to the deed.
Consult a Real Estate Attorney
Consulting a real estate attorney is crucial when considering adding someone to the deed. The attorney will explain the legal implications of adding someone to the title, ensure that the correct legal documents are filed, and guide you through the process.
Update the Mortgage
If you have an existing mortgage on the property, you will need to update the mortgage to reflect the addition of the new owner. This may require refinancing the mortgage or obtaining the lender’s permission to add the new owner to the existing mortgage. If, on the other hand, you simply do not inform the mortgage holder, the additional person on the deed may have no right to be recognized by the bank (or the lender) and may not be able to prevent a foreclosure in the future.
Removing Someone from the Deed:
Removing someone from the deed to a property can be a difficult and emotional decision. It is essential to understand the legal and financial implications of removing someone from the title before making any changes.
Understand the Legal Implications
Removing someone from the deed means that they will no longer have legal ownership of the property. However, they may still have a financial interest in the property, depending on how the ownership was established.
Consider the Financial Implications
Removing someone from the deed may have significant financial implications, such as tax implications or the loss of equity. It is crucial to consider these implications before making any changes. For example, if no money or other value is changing hands as part of the process in removing someone’s name from the deed, the conveyance is presumed by the IRS to be a gift.
Get Legal Advice
Removing someone from the deed can be complicated, and it is essential to seek legal advice. An attorney can help you understand the legal and financial implications of removing someone from the deed and guide you through the process.
In addition to the above, there are other considerations to keep in mind when adding or removing someone from the deed to a home in Missouri.
Joint Tenancy or Tenants in Common
When adding someone to the deed, you need to consider whether you want to hold the property as joint tenants or tenants in common. Joint tenancy means that each owner has an equal share of the property, and if one owner dies, their share automatically passes to the surviving owner. Tenants in common means that each owner can have a different share of the property, and their share can be passed to their heirs upon their death.
Adding someone to the deed can be seen as a gift, and there may be gift tax implications. The current federal gift tax exclusion in 2023 is $17,000 per person per year. Therefore, if you add someone to the deed, you may need to file a gift tax return.
If you are adding someone to the deed, you need to consider the implications for Medicaid eligibility. Adding someone to the deed may affect their eligibility for Medicaid if they require long-term care.
Call Wallach & Associates, P.C.
Adding or removing someone from the deed to a home in Missouri is a significant decision that requires careful consideration. It is essential to understand the legal and financial implications and seek legal advice before making any changes.
At Wallach & Associates, P.C., our experienced real estate attorneys can advise you on all of your legal and financial decisions. Call us today at (314) 308-2900.
By taking the time to carefully consider all the factors involved and seeking the experienced legal advice of Wallach & Associates, P.C., you can make an informed decision that protects your interests and ensures a smooth transition of property ownership.