Q & A with Portland, Oregon Estate Lawyer: Co-Signing a Home Loan for Your Responsible Adult Child
Reader Question:
"I'm considering co-signing a loan so my daughter can buy a house before prices go any higher. My realtor suggested talking with an estate attorney to make sure I understand any repercussions it could have on my estate and financial plans before I go on jointly with her. What specifically should I know?"
Answer:
Your realtor is providing excellent advice. Co-signing a loan has significant implications that go beyond just helping your daughter secure a mortgage. Here are just two of many points to consider:
As a joint owner of the property, if your daughter passes away (especially if she's married), the house could pass directly to you, not her spouse. This can lead to unintended consequences and conflict, particularly if her spouse has been contributing to the mortgage payments. It's essential to discuss this openly with your daughter and her spouse beforehand.
Co-signing a loan exposes your assets to potential risk. If your daughter defaults on the loan or faces a lawsuit, your assets could be targeted to satisfy the debt. This is a critical consideration for your overall financial security.
Fortunately, we can help you navigate these complex issues and explore potential solutions. We can assist you in:
Drafting Agreements: Creating clear agreements between you, your daughter, and potentially her spouse to outline expectations, financial responsibilities, and ownership rights.
Estate Planning: Updating your estate plan to address the joint ownership of the property and ensure your assets are protected according to your wishes.
Asset Protection Strategies: Exploring legal tools, such as trusts, to shield your assets from potential creditors or lawsuits.
Co-signing a loan is a major decision with long-term implications. By planning ahead, you can make informed choices that protect both your daughter's homeownership dreams and your own financial future. Don’t sign on the dotted line until you explore all of your options! Contact our office at (503) 235-5150 for a consultation to discuss your specific situation.
—
If you want to get started on your estate plan, read about our estate planning services and schedule an appointment.
To your family's health + happiness.
~Candice N. Aiston