Putting your children’s names on your assets, can cost you more than you think.

Part II of a three part series.

In the last issue of Senior Advice, we noted that while owing property jointly can automate the process of transferring assets among individuals, and avoid the expense and time associated with probate, the use of joint ownership, carries with it many unsuspecting consequences, including but not limited to: gift taxes, capital gain taxes, exposure to the liability of others and loss of control. In this issue we will examine how adding your children as joint tenants can place those assets at risk and result in your loss of control.

Exposure to Liability. It is important for you to keep in mind that when you add the name of your child to your assets, you are in fact making a present day gift to that child of one half interest in the asset. This “gift” gives your child an immediate legal interest in that property.

As a result of possessing this interest in your assets, if you child is ever sued and a judgment is rendered against them, the judgment creditor can go after the interest your child has in what you thought was “your” property in order to satisfy the judgment.

Thus, while adding your children to the title of you home will avoid the need to rely on the probate process in order to transfer the home to them upon your death; if your son or daughter were to have a judgment levied against them, you can find yourself forced to sell your other assets or refinance you home in order to save it from the claims of their creditors.

Loss of Control. Another problem inherent with joint tenancy is that you can loose control over your assets during your lifetime. As we noted in the first article of this series, most individuals experience with jointly held assets is as the result of their marriage.

Considering the special relationship that exists between a husband and wife, where decisions are made together for a common goal, this form of ownership generally works very well. However, your children’s interest in your property may; and often does, conflict with your own. These conflicting interests can result in your loss of control over your property.

Take the example of adding a child’s name to your stock certificates. Again, assume that the purpose at the time of making the transfer was to provide a convenient means of passing ownership of the stock to your child upon your death. However, if during your lifetime your circumstances change (say you remarry) and you believe that it is appropriate to re-title your stock, you will not be permitted to remove your child’s name from this asset without his or her written authorization.

This need to acquire your child’s signature to dispose of your property becomes even more acute if your child becomes disabled or incompetent. Under these circumstances, you cannot dispose of what were once your own assets without first going to probate court to have your son or daughter declared incompetent. Even then you cannot dispose of “their” portion of the asset without court approval.


In the next addition of Senior Advice we will discuss how you can protect your assets, avoid probate, and still retain complete control of your assets.

The information contained in this column is intended to supply general information to the public regarding Illinois law and is not intended to constitute legal advice.

This column is intended to encourage the reader to seek competent legal advice for their legal needs and as such is intended to be advertising, and is not solicitation, nor the offering of legal advice.

Philip J. Vacco, Attorney at Law ©

(815) 254-3460