Adding a Loved One to Your Deed? Here’s What to Know!

Thinking about adding a loved one to your property deed? It’s a popular estate-planning choice these days! Let’s break down the essentials so you can make an informed decision.

Why Add Someone to Your Deed?

Adding a family member or loved one to a deed often simplifies property transfer after you pass. By having both names on the deed, the property automatically becomes theirs without needing probate. It’s a smart way to plan ahead!

But There’s a Catch—Joint Ownership Changes Things

In Minnesota, the moment another name is added to the deed, the ownership splits. The person you add will co-own a portion of the property, meaning they now have a stake in its equity—even if they didn’t buy it.

Here’s Where Bankruptcy Rules Come In

When it comes to bankruptcy, Minnesota has specific rules about home equity. If your loved one files for bankruptcy, only the equity in their primary home (where they live) can be protected under the “Homestead Exemption.” So, if the property you gifted isn’t their primary residence, that equity could be unprotected during bankruptcy.

But Don’t Worry—There Are Options!

Minnesota allows a “Wildcard Exemption,” meaning they might still protect that equity—up to a certain amount—even if it’s not their primary home.

Wildcard Exemption Amounts for Minnesota

Here’s the breakdown: Minnesota allows federal exemptions, which means in 2022, they could potentially protect up to $15,425 using the Wildcard Exemption.

Bottom Line?

Adding someone to your deed is a loving, thoughtful step, but it comes with some legal and financial considerations. Before making changes, it’s wise to discuss the details with a law professional to ensure everyone’s on the same page. Your future self will thank you!

Please note: This post is for educational purposes only and is not intended as legal advice.

Blog sources:
"Homestead Exemption and Different Situations in Bankruptcy"
"The Wildcard Exemption Under Bankruptcy Law"