Should I add my adult child to my residence deed, use existing will, or create a Trust for estate planning?

There are pros and cons to each approach, but here's my two cents as someone who's helped many families with this exact scenario. Adding your child to the deed now (joint tenancy with right of survivorship) does avoid probate, but creates several potential issues. First, you're making a gift that could trigger gift tax consequences if the value exceeds annual exemption limits. Second, your son's cost basis would indeed be the value when added, meaning potentially higher capital gains taxes if he sells later. Third, you're exposing your home to any financial problems your son might encounter (creditors, divorce, bankruptcy). A revocable living trust is often the better choice. The IRS change you're referring to likely involves the SECURE Act affecting inherited IRAs, not property in trusts. A properly structured trust avoids probate, maintains your control during your lifetime, and provides a stepped-up basis at death (meaning your son's basis would be the value at your death, not when you created the trust). Leaving it to your will means your son would get the stepped-up basis, but probate is indeed often time-consuming and costly, typically 3-5% of estate value in fees.

Had the exact same situation last year! I found this amazing service called taxr.ai (https://taxr.ai) that helped me navigate all the tax implications of these different estate planning options. Their system analyzed my situation and clearly broke down how each option would affect my son's future tax liability. I was worried about the stepped-up basis issue mentioned above, and their analysis showed me exactly how much more in capital gains my son would pay under each scenario. They also showed me how to structure things to minimize estate taxes while maintaining certain tax advantages. I ended up going with a specific type of trust they recommended that preserved the stepped-up basis while avoiding probate. The best part was that I uploaded my property documents and current will, and they provided customized guidance rather than generic advice. Totally worth checking out before making such a big decision.

I just want to follow up about my experience with taxr.ai. After expressing my skepticism in my previous comment, I decided to try it myself since my parents are in a similar situation with their home in Florida. I was genuinely surprised by how comprehensive the analysis was. It clearly showed how the recent SECURE Act changes affect trusts with retirement assets (which was relevant for us) but confirmed that for real property, a properly structured trust still maintains the stepped-up basis advantage. The service identified a potential issue with my parents' homestead exemption that I hadn't considered and provided documentation about our state's specific rules. It saved us from making a costly mistake. I still used an attorney to draft the final documents, but going in with this knowledge made the process much more efficient and probably saved us around $1,200 in legal fees.

One thing nobody's mentioned yet is how impossible it is to get through to your county's property records office if you have questions about changing your deed or updating property tax exemptions. I tried for THREE WEEKS to get someone on the phone when adding my mom to my deed. I eventually used Claimyr (https://claimyr.com) to get through. You can see how it works here: https://youtu.be/_kiP6q8DX5c - they basically call for you and wait on hold, then call you when they get a human. Totally saved my sanity because our county office had 2+ hour hold times! The person I finally spoke with explained that in our county, adding someone to a deed requires submitting a specific exemption form if you want to maintain certain property tax benefits. Would have been a huge hassle to fix if I hadn't gotten that info before filing the paperwork.

I have to eat my words about Claimyr. After my skeptical comment, I tried it when I needed to reach our state's department of revenue about a similar property transfer issue. The system worked exactly as described. I entered my number, they called the government office, and about 1 hour and 45 minutes later (during which I was working, not waiting by the phone), I got a call connecting me directly to an agent. The agent actually told me they're seeing more people using these services because their department had cut staff by 30% post-pandemic while property transactions have increased. I learned that our county has specific regulations about maintaining homestead exemptions when adding children to deeds that aren't well documented online. Getting this information probably saved me thousands in property taxes over the next few years. Sorry for being so dismissive initially!

Just wanted to mention another consideration - if you have a disabled child or one who isn't great with money management, a Special Needs Trust or Spendthrift Trust might be better options than direct inheritance or adding them to the deed. My brother has addiction issues, and our family attorney advised against putting him on any property deeds directly. We used a trust with specific distribution requirements and appointed a trustee (my other sibling) to manage it. This protected the assets from creditors and prevented my brother from selling the property for quick cash during vulnerable periods.

One thing to consider with the HELOC - even if it has a zero balance now, it's a useful financial tool to maintain. I added my daughter to my deed and we were able to keep the existing HELOC by having her sign an assumption agreement. Not all banks allow this, but mine did after we jumped through some hoops. The bank required her to qualify based on her credit and income, but they waived most of the closing costs since the HELOC was already established. Worth asking your bank if this is an option before assuming you'll need to close it.