Q. I want to add my partner's name to my house. We are madly in love and I know this is forever. Are there problems with adding her name to the title of the house.
A. Many LGBT couples want to jointly own real estate. In some cases, one partner already owns a house and wants to add their partner's name. Oftentimes, clients do not always understand the potential ramifications of their actions until afterwards.
The benefit of joint tenancy ownership is that when one owner dies, title to the property transfers automatically to the surviving owner. As opposed to tenancy in common where if one owner dies their interest goes to their family or passes under the terms of their will. The couple is better protected because the property passes to the surviving owner outside of probate. Joint tenancy helps protect the couple's primary asset even if the decedent's family challenges the will. It is also a cheaper alternative than creating a trust to own the property.
It is a common misconception, however, that joint tenancy is always the best answer for LGBT couples.
Adding a partner's name to the title, however, renders it subject to that person's creditors. The property will also be considered an asset for other purposes, such as qualifying for Medicaid or other public benefits.
The "due on sale" clause in a mortgage can be triggered if the parties do not refinance or obtain the lender's consent to the transfer.
Since both parties own the property, both must agree on its sale. Jointly owning real estate is another excellent reason for the couple to discuss and execute a written domestic partnership agreement.
If one partner owns the property and decides to add the other partner's name, the owner must understand that she is giving up exclusive rights to the property and control over it.
Adding the name of another to a property's title can be considered a gift under the I.R.C. gift tax section. Proving the contribution of each party to the property's purchase works to rebut this presumption.
Each person is entitled to a set limit lifetime exemption for gifts. Any amount over the annual allowance is subtracted from the lifetime exemption amount. The giftor may be required to file a gift tax return with the I.R.S.