Attorney Lynne Butler offers this great post on some of the problems with the strangely popular idea of trying to avoid probate by adding children as joint owners of their parents’ house. Ms. Butler is a Canadian lawyer, but the concerns she raises are just as applicable here in the United States. Money quote:

When considering putting extra names on a title, it’s a mistake to focus on just one aspect of the transaction, whether that aspect is tax, probate avoidance or any other concern. You have to look at the bigger picture.

You have to realize that in adding your daughter’s name to your home, you are creating a huge risk to yourself. There are a dozen ways in which this could cause you to lose your home, or to lose a substantial sum of money to hold onto your home. If your daughter were to get divorced, her spouse could claim half the value of the house and if she doesn’t have the funds to pay this out, you could end up paying it yourself just to stay in your own home.

Another popular, but misguided, idea along these lines is adding a child to a bank account so that he or she can pay your bills and have immediate access to your money after you die. There are other, better ways to achieve those goals, besides making your child an owner of your house and cash accounts now. And as Ms. Butler points out, a lot of people who do this are trying to avoid problems they wouldn’t have faced anyway.

Avoiding probate with joint tenancy can cause more problems than it solves

These are both examples of people allowing an unhelpful obsession with avoiding taxes and probate dictate their decision-making. In my experience, trying to game the system by creating paperwork — whether it’s a will, a business contract, or some other type of legal documentation — that bears no resemblance to how the parties are actually living their lives usually backfires. My suggestion is to start with an honest assessment of how you want to live, and draft the documents around that. Engaging in shenanigans in an attempt to avoid legal obligations, like adding a child as an owner of a house that no one intends for her to treat like her own, is asking for trouble.