Have you ever been told that there is "more than one way to skin a cat?" Well, it turns out that this saying is actually true, as least when it comes to probate, and more specifically, how to avoid it.
Probate is when your loved one dies without a trust and/or has a will and YOU, the child or named executor of their will has to file a probate petition and start the long arduous process of probating their estate. Not exactly a trip to Disneyland if you know what I mean. Hence, if you can avoid probate by creating a living trust while you are alive, more power to you.
But if you can't not all is lost. There is something called a Transfer on Death Deed that most states have that can keep your estate out of probate court, and your family, STRESS FREE.
What is a Transfer on Death Deed?
A transfer on death deed is a tool, device, and scheme that helps keep your real property (i.e. real estate) out of probate when you die, and puts it into the hands of your loved ones.
Unlike the deed to your house which likely is in yours and your spouses name, held as either tenants in common, joint tenants, or as community property with right of survivorship, a transfer on death deed has nothing to do with how you or you and your spouse hold title to the property, but everything to do with what HAPPENS to that property after you die.
At its core, a transfer on death deed does exactly that, transfers your home, upon your death to your loved ones, or whoever (doesn't have to be next of kin) you want it to be transferred to.
The Beauty of a Transfer on Death Deed!
If you want peace of mind, then look no further. A transfer on death deed opens the door for you to name your kids as beneficiaries to your house while avoiding some of the pitfalls that come with putting your children directly on the deed, for instance as joint tenants. As a joint tenant, you might see your property taxes increase and of course as joint owners, your children's creditors can now go after your home and real estate. A hard pill to swallow for most parents. This brings us to the transfer on death deed. Because your home actually doesn't transfer over to your children until your death, hence the word "death," none of the aforementioned problems exist while you're alive. Sounds lovely right!?
How do you Create a Transfer on Death Deed?
Frankly, creating a transfer on death deed is a DIY job. Now, I know as an attorney I probably shouldn't be saying this and I can hear a thousand little litigious voices screaming in my head right now, but by and large, creating and executing a transfer on death deed is relatively easy and does not require specialized training, but rather following the simple steps outlined below. That said, do your due diligence and check with your local county recorder's office to ensure that you are complying with any local governmental rules and/or procedure
5-Steps
Find the current deed to the property. Go to your local county recorde'rs office and order a copy of the deed that your want to create a transfer on deed for.. Depending on your county, you might be able to order a copy online. The deed will have the parcel number, legal description, and the person(s) or entity that holds title to the property.
Find a Template. Go online and search for a transfer on death deed template. You'll be surprised how easy this is to do. The catch? Make sure its state specific. For example, if you live in California it probably isn't a good idea to use a transfer on death deed that is from Ohio. I know I know, seems obvious, but I still have to say it.
3. Fill out the Template. Make sure that when you fill out the portion of the transfer on death deed that mentions declarant (which is referring to you) that you write out your name exactly as it appears on your deed. For instance, if the deed lists you as "Joe H. Smith," then that is exactly how you will write in your name beneath the signature line.
Alternatively, if the deed has you down as "Joe H. Smith, as trustee of the Smith Family Trust, then make sure that this is how you list yourself when signing the transfer on death deed. Basically, and not to belabor this too much, the language on your deed needs to MIRROR the language on the transfer on death deed. Down to the letter!
Parcel Number, Legal Description, etc.
Take the parcel number listed on the deed you just obtained from the county recorder's office and apply it to the transfer on death deed. Do the same thing for the legal description. If the legal description is really long and you cannot neatly fit it on the face of the transfer on death deed attach another paper and label it Exhibit "A."
Beneficaries. Write in the person(s) name who will recieve your property once you're gone. Suggestion. Don't get cute! Write the person's name exactly the way its written on their birth certificate and government id. For good measure, I would also recommend stating in parenthesis what yours and the beneficary's relationship is (i.e. child, sibling, relative, bestfriend, etc.) The key is to be as precise as possible, this way, when the time comes, there is no confusion.
Witness AND Notarize. A good rule of thumb is to always follow the instructions that are outlined in black and white. As you see per the transfer on deed example I've included, it outlines in black and white that 2-witnesses are required. Quick note on this. Not all witnesses signatures are created equal. For instance, if your witness also happens to be the beneficiary of your property, then there might be problems down the road with whether or not your transfer on death deed was properly witnessed. Interested witnesses (i.e. witnesses that are also beneficaries) can cause big headaches, so if you can avoid this, please do. Further, make sure your witnesses are over 18 years old. Minors cannot serve as valid witnesses. Next, have the deed NOTARIZED, by a licensed public notary. If you have AAA, they can help you with this. Mobile notaries are fun too, as they come to you, but will charge you a premium for their service.
Record the DEED. Find the local county recorder's office where the property is located and record the transfer on death deed. You'll need to pay a filing fee.
Congratulations! You have now filed and recorded a transfer on death deed, and have utilized one of several probate avoidance tools to...drum roll please...avoid PROBATE.
It's OKAY to Change YOUR MIND
Things change, relationships change. The beauty of a transfer on death deed is that it is not permanent, meaning you can change it up and until the time you die. And this procedure, like the one outlined above, is relatively simple. So sleep easy in knowing that a transfer on death deed offers you the flexibility and peace of mind that one, you've just avoided probate for under $100, and two: you can change the beneficary anytime you want.
Till next time my legalites!-RJM LAWYER OUT.
LEGAL DISCLAIMER. This blog is intended for informational purposes only. In no manner, direct or implied, should this blog or the information shared above be construed as legal advice, or as creating an attorney-client relationship. I am not your attorney, and you should always seek professional advice when taking actions of a legal nature.
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