Transferring a Piece of Real Property to a Child or Sibling can be a powerful estate planning tool. However, it comes with risks. Keep the following in mind: 

1. Loss of Control:

Once a transfer or deed is executed, you will no longer own your home outright. Your child will have a say in whether the house can get sold or mortgaged. Alabama generally allows modifications and improvements however, destruction of structures, harvesting timber, or selling valuable resources may require a the other owner's consent.

2. Impact of Financial Problems:

If a child faces bankruptcy, divorce, or creditor problems, their interest may be subject to execution for payment of debts. Transfer of interest in your home should only be done as part of a comprehensive estate plan with consideration of all the risks and benefits. 

3. Tax Consequences:

While it is best to consult with a Certified Public Accountant, generally heirs who receive property as a gift lose the right to take the property at a "stepped-up basis." This means that the home may be subject to greater capital gains taxes than otherwise applicable if the house had passed through probate or another estate planning tool. 

4. Family Conflicts and Unintended Consequences: 

Co-ownership of land or a house requires communication and cooperation. Jointly owning property almost never solves relationship issues and can cause new issues to arise. Careful consideration should be given to all aspects of property ownership and family relationships is essential to successfully implementing jointly owned property as an estate planning tool. 

Many tools and instruments exist to create the right estate plan for you and your family. Whether it is a trust, life estate deed, will, or beneficiary designation form that you have questions about, give Alabama Property & Estate Law, LLC a call at 256-489-0038. We would be more than happy to speak with you about your goals, options, and develop a plan to preserve your legacy.