Q: I know that you normally advise against adding a child's name on to the title of a home to avoid probate. Instead, could a father execute a deed conveying the home to a child and not record the deed until after his death? Will the home avoid probate?
A: The simple answer to your question is yes, your father can execute a deed conveying the home to you and you could delay recording it until after his death. That should enable you to avoid having to transfer the title of the home through probate.
Having said that, I still don't like the idea. In my humble opinion, unrecorded deeds usually are not a good idea and could potentially lead to problems.
Keep in mind that a deed is not only the transfer instrument for real estate, it serves as sort of a receipt. Before title to real estate is transferred, the deed must be properly executed, stamped and recorded at the county recorder's office. At that point, title to the home is transferred.
The stamped and recorded deed is your proof that the title has transferred.
Some people, including myself, might describe it as a sort of receipt. The recorded deed serves as evidence that the title to a property has been transferred. It's not conclusive proof, but it's pretty darn close.
Until the deed is recorded, the recorder's office doesn't know that your father intended to transfer title. He could therefore do things that affect the title.
For example, he could borrow money and use the real estate as collateral by executing a mortgage. If he encumbers the property before you record the deed, the title will be clouded.
Your father also could issue a deed to someone else and if they beat you to the recorder's office, your deed could be worthless.
Another potential problem could arise if your father's estate plan distributes the real estate to someone other than you. If your dad's will bequests the property to your sister and you go to record your deed, you might find yourself on the business end of a lawsuit involving the estate.
You could have a problem if the rules relating to recording a deed change. The current sales disclosure form that must be filed with deeds needs to be signed by both parties. I'm not sure what would happen if the form changes and your father isn't able to sign it because of his passing.
Unrecorded deeds can be useful under certain limited conditions, such as death-bed planning. However, personally, I would be reluctant to advise using an unrecorded deed. Keep in mind that this is only my opinion. There are some very good attorneys who take the opposite position. I know of an outstanding estate planning attorney who told me he uses unrecorded deeds, not regularly, but enough to disagree with me. In those cases, I defer to my more learned counsel.
Christopher W. Yugo is a member of the Indiana Bar and a vice president and senior trust officer for First National Bank's Trust Department. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN 46321. The information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant, or estate-planning specialist.
