Adding a Spouse to a House Deed

Adding Wife to Deed: I purchased a house in 2002 when I was single. I got married in 2005 and now I want to add my wife onto the deed. What kind of deed should I use? How simple is it to use this kind of deed? What kind of costs are involved? Do we have to pay tax to add her to the deed?

It should be a relatively simple and inexpensive process. As to whether there are any recording fees or taxes, that varies considerably from state to state so that the attorney that you have prepare the deed can advise you. The actual names of deeds also vary by state and custom so you'll want to use whatever deed is conventional in your area. Since the transfer to your wife is a gift by you to her in some areas a "Gift Deed" might be used. There are a number of issues that you should consider before making your simple transfer:

• What title do you want to hold the house in? You and your wife may be able to hold the house as tenants in common (that will enable you each to use 1/2 the house to fund a by pass trust under your respective wills for estate tax planning); you could hold it as tenants by the entirety which might give you and your wife some asset protection in your state. There is an hour long audio clip in the Seminar Materials section of this web site that discusses this topic.
• What are the matrimonial implications? You might be converting a separate and immune asset into a marital asset subject to equitable distribution if you divorce. Check with a matrimonial lawyer.
• What are the estate tax and estate planning implications? Depending which type of ownership the new deed specifies you may, or may not, have probate after the first death to change title to the house. As noted above, the title to the house may affect the ability of you and your wife to do basic estate tax planning. You should clear that issue with an estate planner.
• If you have a mortgage, will the transfer technically trigger the mortgage so that the lender can call it? Is there an exception in the mortgage documents for a spouse? If not does state law provide a special rule permitting family transfers without a mortgage being called? Should you get lender approval?
• Is there any impact from an income tax standpoint? Deductions by your wife of home mortgage interest she may pay if she is not on the deed/mortgage? Impact on home sale exclusion rules, etc.
• Is there any impact on the title insurance? Perhaps a rider can be purchased for a nominal amount from the title company that wrote your policy to add your wife.

Your question is a great one in that it illustrates that even a simple transaction can have a myriad of legal, financial and other implications. This is the problem with most self help legal books and on line web sites. The answers in some cases are not obvious and entail a degree of legal judgement that no fill in the blank form can provide. Without meeting with an attorney that has a grasp of the many issues of home ownership, you really can't be sure how to best transfer, if at all, your house to your wife. Spousal ownership of a home, ubiquitous in America, is unfortunately not simple to plan. Get some professional guidance to be certain you're making the right moves.