Have You Had Your Legal Checkup Lately?

August 29th, 2009

698914It happens every year. My doctor’s office, calls to tell me I need to schedule an appointment. Why?  Because it is time for my annual check-up. I always forget.  That’s ok, that’s why my doctor’s office is calling me. I make the appointment and I appreciate the reminder.

So, where am I going with this?  No, I’m not suggesting that every one of my clients call to book yearly appointments with their attorney. What I am suggesting is that, if it has been some time since you have taken stock of the legal matters affecting your life, perhaps it is time for that legal checkup.

Doctors recommend periodic checkups. While it might not seem as important, a “legal checkup,” which is often called “preventive law” is also improtant. Getting a legal checkup can keep you in good legal health and save you money by identifying small legal problems before they become large ones.  A legal checkup is a review, with your lawyer, of your most important legal matters, papers, and areas of your life.  Like illnesses, many legal problems can be cured or even avoided if found early.

There are several steps in a legal checkup. The first is collecting important legal papers (see below for more information on which papers to keep). Just locating important papers can help prevent future trouble. So can discovering that one or more is missing. Reviewing papers can remind you of things you’ve forgotten to do or of questions to ask.

The next step in your legal checkup is analyzing your current legal situation in light of your goals. Some areas you will want to pay particular attention to are:

Will and estate planning

Do you have key estate planning documents like a will and living trust?  Having these documents helps you make sure your property will go where you want when you die and that your heirs will receive the property in the fastest and least expensive manner.  It also provides other benefits, including letting you select who you want to be guardian of your children in case you and your spouse die while they are minors, and letting you select the person to administer your estate when you die.

Proper estate planning includes more than just having a will and living trust. It also includes making sure you have the necessary documents to make sure your medical and financial decisions are made by the people you want if you become incapacitated, and that your wishes regarding the use of life-prolonging equipment will be known in case it’s ever needed.

Even if you have all necessary estate planning documents, it is important to make sure they are up-to-date. If your will and other documents were made a long time ago, changes may be needed due to increased wealth, changes in your marital status, the addition of new children or grandchildren, death of heirs, changes in your wishes about who should receive your property, and changes in tax laws. For example, reviewing a will you made long ago could reveal the need to make an amendment which can be done at low cost. However, if you die without updating your will, an expensive dispute could arise between family members.

Insurance

Do you have enough and the right kinds of insurance coverage? Liability, casualty, property, life, long-term care and disability insurance provide more than just peace of mind. They provide you money to soften the blow of a disaster. They help pay your legal defense costs if you are sued. Good insurance is key to good legal health.

Closely related to insurance is the need to keep good records of your personal property in the event you suffer a fire or other disaster.  Your personal property records should be kept in a safe place, and should include as much information as possible about the property, including descriptions, purchase receipts and photos.

Property Ownership

How you hold title to property has important consequences. It affects what happens to the property if you separate, divorce or die, it controls who has power to make decisions about the property, it has important tax consequences, and it determines whether or not creditors can reach it.  In many cases, people hold property in a form of title that is contrary to their goals. A key part of a legal checkup is making sure title to all your assets — including your home, car, stocks, bonds and bank account — is held in the proper form.

Contracts

Contract disputes can be expensive and time-consuming. However, there are easy preventive measures to reduce the risk of being involved in them. One is to put all important agreements in writing. Though the law allows both oral and written contracts, certain kinds of contracts must be in writing to be enforceable. Also, oral contracts are riskier, because there’s no clear evidence of the terms or that they were even made. Putting key agreements in writing — and making sure any oral modifications to existing written agreements are also put in writing — can help avoid costly legal problems.

Another easy way to help avoid legal problems from contracts is to read and understand every contract before signing it. Because of time constraints, or for other reasons, many people do not follow this rule. Unless there’s a legal basis for canceling a contract (such as fraud or misrepresentation), a court usually won’t change a contract, even if it has many one-sided provisions in small print. When you read a contract, if you are unsure about anything, seek legal help.

Important Papers

Keep your important records in a safe location, like a bank safe deposit box.  In addition to you (and your spouse) knowing where these documents are, you should inform someone you trust, like your lawyer. Some of the main documents you should have in a fireproof location are:

• birth certificate

• adoption papers

• marriage and divorce records

• military discharge (DD-214)

• immigration records

• insurance policies

• deeds to property

• stock certificates, bank and retirement account records

• income tax returns

• will, trust, living will and other estate planning documents

Finances

Financial problems are at the root of many legal problems. If you are having trouble paying bills, you should consider available options for getting a fresh start.  A lawyer has the skills to negotiate debt settlements on your behalf.

Small Business Books and Records

Articles of Incorporation/Organization; Certificates of Limited Partnership: Are they still accurate? Do they provide maximum protection from liability?

Bylaws/Operating Agreements/Partnership Agreements: Do you have them? Do you follow them? Should they be revised to conform to your actual practices? Have all owners signed off on them?

Buy-Sell Agreements/Shareholder Agreements: Do you have one? Do you need one? Have all owners signed off on it? Is it current? Does the valuation mechanism still work? Does it require annual valuations? If so, is your valuation current?

Stock/Membership Certificates/Registry: Who has the original certificates? Do you have an accurate current registry?

Meeting Minutes (including Annual Minutes) and Biennial Reports: Do you have periodic meetings and keep written minutes? Do you have annual minutes? Are they current? Have you filed your most recent Biennial Report?

Certificates of Authority to Transact Business: Do you have one? Do you need one? Is it current?

Subsidiaries and Affiliates: Do you need any? If you have any, do you keep separate books and records and financial statements?

Registered Agent/Registered Office: Do you have one? Do you need one? Is it current?

Like checkups for your physical health, a regular examination of your legal health can keep you fit as well. If your legal affairs are in good condition, your checkup will involve recommendations to keep them that way.  If your legal affairs are in poor condition, Huddleston Law Offices will alert you to problems you might miss on your own.  Attached is a LEGAL HEALTH CHECK-UP CHECK LIST I have prepared to help you assess whether you need to schedule a legal checkup.

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Legal Rebels – Manifesto

August 26th, 2009

I am a proud member of America’s essential profession. Without lawyers and the rule of law, a free, fair and open society is not sustainable.

I recognize that the legal profession’s traditions – the world’s most respected legal education system, most successful law firms and fairest court system – were once radical innovations.

In this time of economic crisis, I am committed to improving those institutions and creating innovation in the practice of law.  I will question and, when appropriate, change the status quo.  And I will use technology to serve my clients and society.

I’ll help remake the profession I hold dear so it can continue to deliver on America’s promise.

I’m an innovator.  A maverick.  A pathfinder.

I am a Legal Rebel.

via Legal Rebels – Manifesto.

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10th Circuit Court of Appeals: Haskell County 10 Commandments Monument must go

August 22nd, 2009

By ROBERT BOCZKIEWICZ World Correspondent

Published: 8/22/2009  2:26 AM

Last Modified: 8/22/2009  3:44 AM

DENVER — Haskell County commissioners lost another battle Friday in their ongoing court fight to have a Ten Commandments monument remain on the courthouse lawn in Stigler.

A federal appeals court denied a request that the commissioners said was intended to avoid the unnecessary cost of prematurely removing the monument, which the court declared unconstitutional in June.

The officials had wanted the court to delay implementing its decision so that the county wouldn’t have to remove the monument before the U.S. Supreme Court decides whether it will accept the county’s appeal.

Judges of the Denver-based 10th Circuit Court of Appeals voted 2-1 against staying the ruling. The commissioners asked for the stay Tuesday, a day after U.S. District Judge Ronald White in Muskogee ordered them to remove the 8-foot-tall monument. White’s order did not give a deadline for the monument’s removal. He was required to issue a judgment in accord with the appeals court’s June 8 decision because the lawsuit challenging the monument is in his court.

The American Civil Liberties Union of Oklahoma and a Haskell County resident sued to have the monument removed shortly after it was erected in 2004. The appellate judges agreed 3-0 in June with the ACLU and resident James W. Green that the monument violates the U.S. Constitution because its primary effect is to endorse religion.

The commissioners on Tuesday told the judges that a “recall and stay of the mandate is appropriate to preserve the status quo until the case has run its final course.” It is expected to be months before the Supreme Court decides whether to hear the county’s appeal. The judges of the appeals court split 6-6 on July 30, denying the commissioners’ request for the full court to reconsider the June decision of a three-judge panel.

The Supreme Court accepts appeals in only about 2 percent of the cases it is asked to review. Attorneys for the commissioners contend that the Stigler case has a strong chance of being accepted by the high court.

The commissioners argued in Tuesday’s request that the tie vote and the “spirited” position of judges who favored rehearing the case “illustrate that this case is a good candidate for Supreme Court review.” But attorney Daniel Mach of the ACLU said previously that “the Court of Appeals got it right. There’s no reason for the Supreme Court to take this case.”

By ROBERT BOCZKIEWICZ World Correspondent

via Tulsa World: Court: Monument must go .

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How Should/Can I Hold Title To My Home In Oklahoma?

August 20th, 2009

deed

Several factors go into the decision to buy a home, e.g., price, location [location, location :-) ], condition and financing. One decision is often over-looked, and that is how to take and hold legal title to the home. However, this decision will affect who can sign documents regarding the property, whether creditors can get to it, and how the property will be transferred on your death. Here are the typical ways to hold title to your home or other real estate.

Sole Ownership

This is how an individual holds title to property. The deed may say: “John Doe, a single person” or similar language. It means one person owns the property alone. This ownership form does not apply to property bought by married couples. However, if a married couple wants to put title in the name of one spouse, the deed could say “John Doe, a married person, as his sole and separate property.” When a married person takes title as sole owner, the spouse usually must consent to this and give up all rights in the property by a quitclaim deed or other disclaimer of interest in the property. A sole owner is free to transfer the property as he or she desires, and when the sole owner dies, the property passes by the person’s will unless a Transfer On Death Deed has been recorded.

Co-Ownership

There are several ways co-owners may take and hold title, including:

• Community property. For married couples in “community property” states, this is one of the main ways the couple can hold property. Oklahoma is not a community property state even though an Oklahoma statute exists stating that a husband and wife may hold property as community property. 43 O.S. 207. No two community property states’ laws are alike. In fact, laws in one state may be completely opposite to those of another state on a particular issue. The right of a creditor to reach community property in satisfaction of a debt or other obligation incurred by one or both of the spouses varies from state to state.

• Joint tenancy. Available in almost every state, this ownership form is an option when all of the co-owners will each have an equal ownership interest in the property. In Oklahoma, the four unities of time, title, interest, and possession must be present to create a joint tenancy. The deed must say title is taken as “joint tenants,” or as “joint tenants with right of survivorship,” and the owners must all take title at the same time. 60 O.S. 1991 § 74 Each joint tenant has an equal right of possession, meaning none can exclude the others or claim a certain portion belongs to him or her. A joint tenant can usually sell his or her interest in the property without the consent of the other owners. If there are only two joint tenants and one sells his or her interest, a tenancy in common is created. If there are three or more owners, the joint tenancy interest ends for the interest sold, but stays in effect for the remaining interests. A lien on a debtor’s joint tenancy interest is extinguished if the joint tenant dies before execution on the lien. However, a levy or execution before the joint tenant dies destroys the joint tenancy and allows the creditor to reach the interest of the debtor. The most important characteristic of joint tenancy is that when a co-owner dies, his or her ownership interest goes to the other co-owners by operation of law, and not by a will. As a result of this feature, called “right of survivorship,” the last joint tenant will own the entire property. If two people own property and they want a comparatively easy way for the other person to receive their interest upon death, joint tenancy is an ownership form to consider. The surviving joint tenant only has to file with government entities a few documents to establish full ownership. 58 O.S. 912 If a co-owner of property wants to be able to give away his or her interest by a will, joint tenancy would not be a good way to hold title. Note, it is not a good idea to add your child as a joint tenant on the deed to your home if the primary reason is to simplify the transfer of the property upon your death (i.e., to avoid probate). Never, ever create a joint tenancy with a minor child!

• Tenants in common. Tenants in common are also co-owners of property. Unlike joint tenants, tenants in common do not have to have equal ownership interest in the property. Each co-tenant has an equal right of possession, and each can convey his or her interest without the consent of the other owners. Any tenant in common is free to sell his or her interest. If one co-tenant wants to sell the entire property and the others don’t, a sale can be had by filing a “partition action.” The most important characteristic of a tenancy in common is that when a tenant in common dies, the owner passes his interest to his heirs or his estate and not to the other co-owners.

• Tenants by the entireties. Many non-community property states, including Oklahoma, let married couples hold title as “tenants by the entireties”. 60 O.S. 1991 § 74 Basically, one can think of a tenancy by the entirety as ownership by married joint tenants. That is to say, when a spouse dies the surviving spouse becomes sole owner of the property. Tenancies by the entirety are founded on the somewhat antiquated legal fiction that the husband and wife are considered one person, and consequently, the husband and wife can not truly own the real estate concurrently because they only possess a single interest. Tenants by the entireties are a useful form of ownership because, at common law, creditors usually cannot seize that half of the property owned by the debtor’s spouse. In Oklahoma, however, the legislature qualified the common law tenancy by the entirety by the above statute which states that “[n]othing herein contained shall prevent execution, levy and sale of the interest of the judgment debtor in such estates and such sale shall constitute a severance.” Because this qualification only applies in situations involving judgment debtors, and thus involuntary conveyances only, Oklahoma still applies the common law tenancy by the entirety in matters not involving judgment debtors. That is to say, a spouse may not sell or convey his tenancy by the entirety interest in the property without the consent of the other spouse. Thus, by disallowing individual voluntary conveyances but allowing individual involuntary conveyances, Oklahoma has a unique form of tenancy by the entirety, which in this writer’s opinion, should be used more often by couples living in Oklahoma.

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Black & Decker Coffeemakers Recalled By Applica Consumer Products Due to Burn Hazard

August 18th, 2009

NEWS from CPSC

U.S. Consumer Product Safety Commission

Office of Information and Public Affairs Washington, DC 20207


FOR IMMEDIATE RELEASE
August 18, 2009
Release # 09-309		 Firm’s Recall Hotline: (866) 699-4595
CPSC Recall Hotline: (800) 638-2772
CPSC Media Contact: (301) 504-7908

Black & Decker Coffeemakers Recalled By Applica Consumer Products Due to Burn Hazard

WASHINGTON, D.C. – The U.S. Consumer Product Safety Commission, in cooperation with the firm named below, today announced a voluntary recall of the following consumer product. Consumers should stop using recalled products immediately unless otherwise instructed.Name of Product: Black & Decker® Thermal Coffeemakers

Units: About 9,800

Distributor: Applica Consumer Products Inc., of Miramar, Fla.

Hazard: The coffeemakers can overheat and melt, posing a burn hazard to consumers.

Incidents/Injuries: The firm has received one report of a coffeemaker melting. No injuries reported.

Description: This recall involves Black & Decker 8-cup programmable thermal coffeemakers. Model number TCM1000IKT is printed on the rating plate on the bottom of the coffeemaker.

Sold at: Walmart and small retail stores nationwide from April 2008 through July 2009 for between $50 and $65.

Manufactured in: China

Remedy: Consumer should immediately stop using the coffeemakers and contact Applica to receive a free replacement household product.

Consumer Contact: For additional information, contact Applica at (866) 699-4595 between 8:30 a.m. and 5 p.m. ET Monday through Friday, or visit the firm’s Web site at www.acprecall.com

Picture of Recalled Thermal Coffeemaker

CPSC is still interested in receiving incident or injury reports that are either directly related to this product recall or involve a different hazard with the same product. Please tell us about it by visiting https://www.cpsc.gov/cgibin/incident.aspx

—

Send the link for this page to a friend! The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of serious injury or death from thousands of types of consumer products under the agency’s jurisdiction. The CPSC is committed to protecting consumers and families from products that pose a fire, electrical, chemical, or mechanical hazard. The CPSC’s work to ensure the safety of consumer products – such as toys, cribs, power tools, cigarette lighters, and household chemicals – contributed significantly to the decline in the rate of deaths and injuries associated with consumer products over the past 30 years.

To report a dangerous product or a product-related injury, call CPSC’s Hotline at (800) 638-2772 or CPSC’s teletypewriter at (800) 638-8270. To join a CPSC e-mail subscription list, please go tohttps://www.cpsc.gov/cpsclist.aspx. Consumers can obtain recall and general safety information by logging on to CPSC’s Web site at www.cpsc.gov.

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What is a Transfer-on-Death (“TOD”) Deed?

August 17th, 2009

The Nontestamentary Transfer of Property Act (“Act”), set forth in 58 O.S.Supp.2008, §§ 1251 – 1258, allows a record owner of an interest in real estate to designate who will receive

invest_article_20081101_2

a transfer of the interest in the future, effective upon the owner’s death. The transfer is accomplished by recording a Transfer-on-Death Deed (“TOD”). Interests in “minerals” 16 O.S.2001, §§ 61 – 68, constitute an interest in real estate transferable pursuant to the Act. See, OAG Opinion 2009 OK AG 6.

The TOD deed designates the person(s) who are to become the owners of the property after the owner’s death, all without a probate proceeding. Like payable on death financial accounts, the owner can change this designation any time by recording with the appropriate real estate records office a document which changes the beneficiary designation. This change does not require any consent or approval of the beneficiary. Prior to the enactment of this new law, if an owner of real estate attached someone else’s name to the ownership of real estate, that “someone else” would have an ownership interest in the property and would be entitled to a share of the sale proceeds, and that “someone else’s” signature and consent would be needed in order to sell or refinance the property. Consequently, it is risky for owners to place their children’s names on the title to their home, or on any other realty they own.

The key benefit of the TOD deed is that the real estate doesn’t have to go through probate court proceedings upon the death of the record owner, saving your family time and money. After the death(s) of the Grantor Owner(s), the following documents must be filed with the county recording office in which the Transfer on Death Deed was originally recorded:

  • A TRANSFER ON DEATH AFFIDAVIT of Identity and Survivorship, which identifies that the Grantee Beneficiary or Beneficiaries survived the deaths of all the Grantor Owners.
  • Certified Copies of Death Certificates for each of the Grantor Owners.

Oklahoma’s law authorizing TOD deeds took effect on November 1, 2008.

The enactment of the transfer-on-death deed statute provides a low cost alternative to probate, as well as to many other problematic methods of property transfer, benefiting clients and simplifying the real property transfer system.

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Do Homeowners Really Need To Buy An Owner’s Policy Of Title Insurance?

August 15th, 2009

Title insurance is an absolute necessity in every real estate conveyance transaction. The problem is that most home buyers don’t know what title insurance is or what it covers, and only see it for the first time on the closing settlement statement.

So, what Is Title Insurance?

Title insurance is a policy of insurance protecting homeowners and lenders from loss in the event that certain covered problems develop regarding the rights to ownership of the

policy

real estate purchased. While title examiners will search and certify the title to real estate before closing, there can be hidden title defects that even a careful title search will not reveal.  In addition to protection from financial loss, title insurance pays the cost of defending against any covered claim.

There are two types of title insurance, lender’s and owner’s policies. If you have a mortage, a lender’s policy is required and will be a part of your closing costs. However, owner’s policies are optional and cost extra. The lender’s insurance protects the lender up to the amount of the mortgage, but it doesn’t protect your equity in the property. For that you need an owner’s title policy for the full value of the home.

What Does An Owner’s Policy Of Title Insurance Cover?

Owner’s Title Insurance will cover the cost to remove clouds on your title from such things as un-discharged mortgages, and the claims of unknown or missing heirs. An owner’s policy also covers these types of title defects: forged deeds or impersonations, incorrect legal or boundary descriptions, and recording errors. There is also extended coverage available for: building permit violations, adverse possession or prescriptive easements, building encroachments, incorrect surveys, pre-existing violations of subdivision, zoning laws, and restrictive covenants.

Is Title Insurance Worth The Cost?

Title insurance is based on the purchase price of your home.  The additional cost above the cost of the lender’s policy is relatively small. Typicaly, the premium is several hundred dollars. Title insurance is a good deal because it continues to provide coverage for as long as you or your heirs own the property. Passing up on an owner’s policy of title insurance because the risk of a title defect is minimal is a bad idea.  If you don’t believe me, consider this real title defect horror story.

house_v1

Imagine building your dream home, then finding out after closing that your builder built the house on the wrong lot!  Worse, the house is on a lot that the builder does not own, so he can’t simply swap lots with you.  This happened to a new client of mine from Tulsa.  A builder bought a lot from a developer of a sub-division, but mistakenly built a house on an adjacent lot. The builder then compounded his error by selling the house on the lot he did not own to my client, all the while representing that the house was on the lot the builder did own. My client moved in, but later discovered that her house is not on the lot to which she received title.  Instead, the house is on the adjacent lot that is still owned by the developer.  Now I have the job of trying to solve this problem.

To complicate matters, Oklahoma law (60 O.S. §334) provides: “When a person affixes his property to the land of another without an agreement permitting him to remove it, the thing affixed belongs to the owner of the land….”  Oklahoma case law is in accord. See, Mid-State Homes, Inc. v. Martin. It follows then that the developer may not be interested in simply trading his significantly improved lot for the vacant one he originally sold to the builder.  The title insurance company may well have to provide the funds to buy the improved lot from the developer, and thereby protect the interests of its insured.  If so, the title insurance policy would be well worth the cost.

At this point, my client does not have title to the house she paid for, and her lender’s home mortgage is only secured by the adjacent vacant lot. This kind of mess is the sort of fact pattern found on law school and state bar exams.  It is an interesting case for me, and I expect that I will have to sue the builder to recind the sale, and file a lis pendens against the developer’s improved lot.  Sometimes litigation is the best way to get all the interested parties to the table to obtain a just resolution of the matter.

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Are Tweets and Facebook updates telling burglars when to strike?

August 12th, 2009

A few weeks back, my six year old son and I were fishing in the Canadian Outback for a week.  I used my iPhone to post photos and Facebook status updates about landing theIMG_0333 float plane safely on the lake, the lodge accomodations, and the fish we caught.  My wife and daughter, who have no interest in “roughing it,” really enjoyed the updates. 

Social networking sites such as Facebook, Twitter, and MySpace are one of the most interesting and popular innovations on the Internet in the last few years.  Almost everyone I know uses one or more social networks. Even my mother is on Facebook and no doubt will soon be sending me tweets from the farm in Arkansas. These social networks depend upon the interactions between the users. The first thing you do is connect with people you know, and then you start sending out status updates (Facebook) or tweets (Twitter) to all of your friends.  Most status updates and tweets leave much to be desired. But then there are those times when life is more exciting as you leave home for more exotic climes in search of sun, sea, surf, and perhaps some other ‘S’ words.

The problem is that informing the world of your excursions out of town could have serious consequences.  For example, what if my whole family had gone fishing?  Would I have been doing the cyberspace equivalent of putting a big sign on the front lawn saying, “Come on in, burglars! We’re not home.” Before you call me paranoid, consider the following recent events.

The burglary of an Arizona video editor made headlines last month because he thinks that his Facebook and Twitter update habits may have led to it. He not only told his network of social media friends that he was going out of town but also shared some adventures of his road trip to Kansas City. While he was away, someone broke into his home and stole his video editing equipment. From the AP story:

Most people wouldn’t leave a recording on a home answering machine telling callers they’re on vacation for a week, and most people wouldn’t let mail or newspapers pile up while they were away. But users of social media think nothing of posting real-time vacation photos on Facebook showing themselves on beaches hundreds of miles from home, or sending out automatic e-mail messages that say, “I’m out of the country for a week.”

Similarly, police in Alabama arrested two men who allegedly burglarized the homes of Birmingham residents they tracked on Facebook.  Police say the suspects used the popular social networking site to glean personal information about residents, including summer travel plans.  Police believe the men worked together to steal jewelry, television sets, computers, cell phones, guns and other items from five homes of people who were either friends or “friends of friends” on Facebook between July 12 and July 22. 

Of course, for you to be burgled as a direct result of updating your Facebook status or tweeting on Twitter about an upcoming holiday, you would have to have a potential burglar in your friends list or amongst your followers. Moreover, the criminal masterminds would have to find out exactly who you are and where you live. The point is that it could happen and, we all know there is information about all of us on the Internet.  So, the next time you are on vacation, or even when your house will be empty for several days, consider NOT telling all of your Facebook friends and Twitter followers that you are leaving. Just to be on the safe side, be a little vague on the details of your holiday until you get back.

After all, the last thing you need is to come home to a ransacked house:

 

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Should we put our child on the title of our house?

August 3rd, 2009

house_v1Many elderly people think or are told that the best way to avoid having their house go to income taxes, estate taxes, capital gains taxes, probate fees, to pay for their medical bills, or to their creditors is to place one or more of their children on the title to their house.

Unfortunately, this advice is usually coming from someone with no experience or training in any of these areas. Usually, the person giving the advice has gotten this idea from a friend or off the Internet and the parent has no idea of the problems that they are actually creating by placing a child on the title to their home.

Here are a few quick bullet points of SOME of the problems that can occur by putting a child on the title of your home:

  • YOU CAN LOSE YOUR HOME – If your child gets into financial trouble with creditors, the IRS, a lawsuit, etc, the child’s creditors may be able to come after your home.
  • YOUR CHILD COULD TAKE OUT A LOAN AGAINST YOUR HOUSE – Your child is now a co-owner and could possibly take out a small loan on your house. For a large loan or to sell the house, your child would normally need to obtain your signature(s).
  • YOU MAY BE DISINHERITING YOUR OTHER CHILDREN – Depending on the laws of the state where your house is and the why your child takes title with you, your house could automatically become the child’s house and your other children would then not get a share of your house.
  • YOU ARE ACTUALLY INCREASING THE RISK OF TAXES – By placing your child on the title to your home, you have created a gift tax issue that needs to be addressed. In addition, by giving the gift, you have increased your child’s liability for capital gain taxes on the sale of the house. If your child WANTS TO (i.e., the child may not legally have to) share the profit on the house with their siblings, your child also runs into gift tax issues.

These are just some quick examples of problems that can occur on the transfer of your house to one or more of your children. If you are considering putting a child on your deed, there is a new alternative for Oklahomans. It is called a Transfer-on-Death Deed. I will write about the TOD deed in my next post.

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