Bottom line up front, when you add someone to the deed to your property, you are adding an uncontrolled variable to your asset and losing some level of control. If they get sued, that asset is available to pay the piper. If that co-owner dies, their will might say where it goes, even if you don’t like his pen pal from Tuscaloosa. It makes it hard to pledge (aka mortgage) the property if both parties don’t want to (and even if the spouses to the owners aren’t on the title, they have to sign the pledge of the property but not the actual promissory note to pay).
Adding someone to the deed is a gift but for estate valuations, it may still be entirely includable in your estate. Adding someone to the deed exposes the gain on the property that might otherwise be sheltered by the capital gain exclusion for primary residence ownership. Further a gift less 5 years before applying for nursing home assistance from the state or 2 years before filing bankruptcy may cause eligibility issues.
Further, the parcel is an asset for financial aid for post-secondary education and for title 19 considerations.
If you aren’t scared off yet, consider how you own the property.
Life estate (aka life use, life lease) is a fractionalization of property where the owner keeps use, control and responsibility to maintain and pay taxes and gives the other parts of ownership to someone called a remainderman. The remainderman gets the parts of ownership that were retained when the original owner dies. This transfers some but not all of the property. Therefore, some of the value of the property remains exposed to creditors and claims against the original owner. The original owner can’t mortgage or sell (other than their life use) with out the remainderman’s consent. It is poor man’s trust that probably had a place in planning prior to Iowa’s Supreme court creating a fiction that Iowa’s Medicare claim can be asserted against a life time interest at the time of that life’s death, essentially creating a net to catch the value of the life estate before it is reunited with remainderman.
Joint tenancy with Rights of survivorship means “winner take all”. Whoever dies first, the other title holder takes 100 percent ownership. Sounds great, the problem is , any joint tenant can shift the ownership from Rights of survivorship to Tenants in Common.
Tenants in common is a form ownership where each owner’s will controls where their respective slice of ownership goes. That can result in parties owning property with people they don’t like, which leads to partition actions.
A partition action is where the courts decide if the property it to be sold and the money divided or if each party can maintain a slice of real estate. Property inherited form a common ancestor make it more available that a forced sale. That is a whole separate entry.
Iowa doesn’t recognize some other property holding concept that other states do such as community property laws, tenancy by the entirety, heirs’ property, lady bird deeds (super life estates) and Transfer on Death Deeds. If you encounter those, seek competent counsel in those jurisdictions, they are wildly different.
