Adding your spouse’s name to the deed will expose your property to any judgments against him. For example, if he has a bad debt, his creditor can sue and force the sale of your property to pay it off. Become familiar with your spouse’s financial history before you decide to add his name to your deed. If you alter the deed so that you and your spouse both own the property, instead of just you, it changes the situation in the eyes of banks, lenders, and the government. Depending on your spouse’s financial status and earnings history, adding his name to your deed may make you ineligible for refinancing, a reverse mortgage, or certain government benefits such as Medicaid. [1] X Research source
Generally speaking, adding another owner only makes the probate process more complicated. As long as you retain interest in the home, it’s still going to go through probate. [2] X Research source If your goal is to avoid probate, you must specify in the deed that you are claiming as joint tenants with a right of survivorship. Some states have a specific deed-holding status: Tenants in the entirety. That applies only to married couples. If you live in a community property state, you can specify the home or land is community property with a right of survivorship. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states. Otherwise, married couples usually claim property as tenants by the entirety. Your county recorder’s office will have a list of ways to claim property. Make sure you select the one that best suits your needs. To avoid probate, you must choose an ownership relationship that includes a right of survivorship. That means when you die, your spouse will absorb your ownership share of the property. [3] X Research source
If you add your spouse to your deed, he will have to use your basis if he later sells the property. That means he could pay substantially more in capital gains taxes than if he acquired the property when you died. To continue the previous example, suppose you added your spouse to the deed for the house you bought for $100,000. You die 50 years later, and your spouse decides to sell the house five years after that for $1 million. His capital gain would be $900,000. However, if you transferred the property to your spouse at your death, for example through a transfer-on-death deed, his capital gains basis would be the fair market value of the house when he acquired it. This could result in far lower capital gains taxes. Returning to the $100,000, suppose you create a TOD deed for your spouse. When you die 50 years later, your spouse acquires a house with a fair market value of $900,000. When he sells it five years later for $1 million, he only owes capital gains taxes on $100,000. [5] X Research source Before you add your spouse to your deed, it’s important that both of you understand how it potentially affects your tax liability so you can make an informed decision and not be caught unaware later on.
The form will include a blank for your name, the names of the people to whom you want to transfer the property, and the legal description of the property (which you can copy from your old deed). [7] X Research source You want to transfer the property from yourself to your spouse and yourself, making the two of you joint owners. This is also where you specify how the two of you will own the property.
In some areas, your spouse also must sign the deed. You can ask at the county recorder’s office when you pick up the form, although usually you can tell by whether the deed includes blanks for both of you to sign. Depending on how you claim the property, you may also need a spousal affidavit. [8] X Research source The affidavit states that the two of you are a married couple, and must be signed by both of you under oath in the presence of a notary. For example, if you’re claiming the property as tenants by the entirety or as community property, the deed would have to be accompanied by a spousal affidavit because those methods of claiming property are only available to married couples.
You also may have to pay any property taxes that have been reassessed as a result of the change in ownership. [9] X Research source
