Quitclaims are not Estate Planning

 

Photo by @francesgunn

Time and time again I see examples of people who thought it was a good idea to reduce their Estate Planning to a quitclaim of real estate to another person.

That is NOT Estate Planning.  That's not even basic Estate Planning.  It's a bad idea.  Here's why:

  • Quitclaims do not #communicate your wishes.  #Wills and #Trusts communicate your wishes.  Quitclaims can actually create questions without good answers.  "What did Mamma want to do?"  "Was Daddy coerced wrongly into the quitclaim."

  • Quitclaims can create #taxable events.  Example, a parent quitclaims a child's name onto a property.  The parent has now "gifted" half (1/2) the property to the child immediately, not after death.  This can trigger a "gift tax", taxable by the IRS.  Admittedly, this is a tax that is often not pursued by the IRS, but it does not change the fact that the taxable event exists.

If someone is just determined to quitclaim property to anyone else for reasons of Estate Planning and they do not care about the taxable event listed above, then at least accompany quitclaim with a Will stating that the intent is to pass the property onto the person now listed on the property.

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