It happens all too often. Fearing the alleged difficulties of probate, families add adult children as joint owners to a real estate deed or onto a bank or brokerage account, hoping to avoid the Surrogate’s court process required to allow the Executor to be appointed with authority to collect and distribute assets. But did anyone stop to consider the consequences during your lifetime?

For instance, adding your children as joint tenants with rights of survivorship seems really clever and you probably don't even need an attorney to help draw up a deed and record it with the county clerk or register of deeds. Great, right? Wrong.

If you add your children as joint tenants on a deed to your residence or other real estate, you've just gifted an interest in property to them. That gift likely requires filing a gift tax return; the amount you can gift in 2022 without the need for filing a return is $16,000 per person. So, for a couple electing to gift split, that's $32,000 to each child before running afoul of Internal Revenue Code rules and regulations.

Not only that, but for income tax purposes, you've just given your children your basis in the property. If the property is later sold, they may have to pay capital gains taxes on their portion of the sale proceeds because your home can’t qualify for the primary-residence exclusion unless they are living with you. If you recently purchased your home that may not be too bad, but for many couples, they are transferring interests in property they've held for 40 years or more, with a basis of $15,000-$20,000.

Possibly worse, if you need long-term care in the next five years and cannot afford it, when you apply for Medicaid benefits, you just created a penalty period that will keep you from qualifying for many months. Your home is otherwise exempt as a countable asset when you apply for Medicaid benefits if you are still residing in it and intend to return to it.

Last but not least, if your children have or develop creditor issues, you just opened yourself up to potentially satisfying their debts. For example, if an adult child files for bankruptcy protection but owns an interest in your home, the bankruptcy trustee may ask you to purchase the interest you gave away to help satisfy that child’s creditors.

Before you engage in self-help estate planning, do yourself a favor and speak with an experienced estate planning attorney who can point out all of the risks to you. You do have options to safeguard assets and to avoid probate if that's what started you down the planning path. But educate yourself to save not only money, but heartache and possible litigation.