The Basics of a Transfer on Death Deed
Sometimes known as a Beneficiary Deed, a Transfer on Death Deed is a document that outlines the beneficiary/ies of a person’s physical property or real estate in the event of their death. This document comprises of no more than 3 pages and is normally written or laid-out in the county where the property in question is homed.
With the use of a Transfer on Death Deed, your real estate can be omitted from the probate process while planning for your estate. The probate process is a costly and lengthy one whereby the court of law becomes the executor of the estate in question in the event of your death. It is imperative therefore, to exercise acute estate planning where the probate process can be completely avoided.
If property exists that is has become the possession of the deceased through special means, such as a house with only one owner is deemed “probate property” and will undergo the probate procedure. If the owner of the house is deceased, the probate process must take place in order have its ownership changed to the nominated beneficiary.
In order to avoid the probate process, the house will need to be made a “non-probate property”. It can however, initially be non-probate property in accordance with the manner with which its title is held. While on the other hand, with the use of a transfer on death deed or a trust, be converted into a non-probate property.
In the case where a deed sights owners as “joint tenants”, it refers to the fact that they have equal ownership of the home. Should one of the joint tenants pass away therefore, the other claims full ownership of the property. This means therefore that real estate held under a joint tenant agreement is deemed non-probate property. Suffice it to say, the death of either one of the joint tenants renders the joint tenant agreement null with no room for any other tenant to join the agreement in the place of the deceased, thus making the remaining joint tenant the sole owner of the property, meaning that it then becomes probate property.
Apart from joint tenancy, there are other ways that some states have found as a binding factor to one’s property that can circumvent the probate process. An example of such is marriage.
The deed transfer on death
Turning real estate into non probate property can be best executed through a transfer on death deed. As previously stated, a transfer on death deed is a brief document that is easy to understand. Bearing no significance while the property owner is still alive, the deed transfer upon death can very well be cancelled or changed as and when the owner sees fit.
Upon death however, beneficiaries of the property need only to produce the owner’s death certificate in the country where the property is held before claiming ownership of the property.
The downside to transfer on death deeds however, is that they only exist in some states (list available below), therefore alternative documents such as trusts can be used in their place to ensure that the probate process on real estate is avoided.
A trust is a document that appoints a person (the “trustee”) as the property’s legal owner in someone else’s (the beneficiary) stead who will manage the property until such time that it can be handed over to the beneficiary. A living trust on the other hand can be revoked during the time that the owner of the property is still alive. Many people have used trusts as a means to avoid the probate process on their property. Here is how it works:
If a person who owns property such as a home, antiques or even jewellery wishes to bequeath it to his three children, may want to save them from undergoing the probate process. He may not necessarily be willing to part with his property while he is still alive and may even entertain the thought that he still has a long life to live. In a case such as this, he can draft a revocable living trust that will detail his property and beneficiaries in the event of his death. Once deceased, the process for winding up his estate according to his trust may then resume. The deceased’s nominated trustee privately takes over the estate outside of the probate process and accords each child their share of the estate as the new beneficiaries.
A “declaration of trust” is what is most commonly used to draft a trust. A house deed transfer after death can be drafted an transferred into the trust after creating, using the declaration of trust document. The house deed transfer after death is used to transfer the property into the trust when the property in question is real estate. Therefore, if one uses a trust in order to avoid the probate process, he/she also has to make sure that they draft a transfer deed that will incorporate the estate in their trust.
States that allow transfer upon death deeds
A transfer upon death deed creation is permissible in the following states:
*NB. “Enhanced life estate deeds” are permissible in Florida which are also known as “Lady Bird deeds”. This type of deed’s mechanism is similar to a transfer on death deed.
The Creation of a transfer on death deed
In order for a transfer upon death deed to be fulfilled, the document needs to be in the possession of the beneficiaries. Anyone can be in possession of the deed transfer upon death according to some states, though the one on possession of it cannot be a company or an organization. There can be a singular or multiple beneficiaries but in the case of multiple beneficiaries some states require that the estate be evenly divided amongst them. If drawn up well, a transfer on death deed will make accommodations for alternative beneficiaries should the initial nominated beneficiaries die.
Every state has a unique set of legal requirement for a transfer deed of house after death. The unifying requirement for many states however, is that the information on an ordinary deed and transfer deed of house after death be uniform such as the name of the beneficiaries and a valid account of the property in question. Added to the above mentioned requirements the transfer on death dead needs to state without a shadow of doubt that its purpose will only take effect once the owner dies.
Documenting and signing a transfer on death deed
In order for it to be deemed legal, a deed transfer on death has to bear the signature of the owner soon after it has been drafted. Precise recommendations for signing are different with every state but many states will require the owner’s signature on the transfer on death deed and for it to be notarized. As norm, those benefiting from the transfer on death deed need not sign it.
A transfer on death deed has to be documented prior to the property owner dying for it to be regarded as a legal document. It needs to be drafted in the public records of the same county where the property is. It is only once the transfer on death deed has been recorded that it is regarded as a legitimate non-probate transfer of the property.
In order for the beneficiaries to benefit the property and claim ownership, they need to produce the owner’s death certificate. When the property is transferred to the beneficiaries it comes with mortgages, liens, etc. attached to is. Therefore it is likely that those inheriting the property will also take on the home’s financial burdens such as a mortgage that is yet to be paid off.
Revoking a transfer on death deed
As mentioned prior, the cancellation of a transfer on death deed can take place at any time while the property owner still lives. In order for the property owner to cancel the transfer on death deed, a revocation document needs to be created or a brand new transfer on death deed needs to be documented to work in the place of the old one.
For one to create a revocation document, a request needs to be made at the county recording office where the transfer on death deed was initially documented. All the stipulate requirements of the revocation form such as it being filled out, signed and recorded should mirror the deed.
The best way of changing or cancelling a transfer on death deed is to have a new one created from fresh. When doing so, it is important to ensure that the new deed is created in the same manner that the old one was created. It also needs to cancel any prior documented transfer on death deed pertaining to the property. For the new transfer on death deed to be validated, it needs to be recorded just like all deeds.
Does one need an attorney to create a deed transfer on death?
The answer to that is no, an attorney is not needed in order for a transfer on death deed to be created. While there are standard forms that some states offer in order for a transfer of deed to be created, they are not always updated and do not bend to meet the individual needs of everyone.
Online software offer the best way to create a transfer on death deed that will cater to an individual’s needs and adhere to your state’s legal requirement. You can even have your transfer on death deed created that is tailored to your specific needs within minutes with some of the best estate planning software that can be found online.