I didn’t know real estate beneficiary deeds existed until recently. In the August 13-14, 2016 Loveland Reporter-Herald I read a question and answer article about someone whose parents died. The reader wanted to know how to transfer his parents’ real estate property into his name. A follow-up to that piece stated a simple way to accomplish this task is to set up a beneficiary deed. I looked into it.
Below you will find information from The American Bar Association so you can also understand the simple process of transferring real estate upon death. However, not all states currently use the transfer-on-death deed. It became law in Colorado in 2004.
REAL ESTATE LAW
Transfer-on-Death Deeds
“A transfer-on-death (TOD) deed, or beneficiary deed, allows an owner of real property to execute a deed that names a beneficiary who will obtain title to the property at the owner’s death without going through probate. This article examines the advantages and disadvantages of using TOD deeds and details how these deeds work. It provides several typical estate planning scenarios that highlight when the use of a TOD deed may be appropriate and when a different method should be used to transfer real property.
The execution of a TOD deed has no tax consequences.
Pros and cons of TOD deeds. A TOD deed solves many of the drawbacks associated with the other mechanisms available for transferring real property at death. Making a TOD deed an option will help property owners in a variety of circumstances. In contrast with using joint tenancy or a legal remainder interest, a TOD deed creates no present interest in the named beneficiary. This provides several benefits: The owner does not make a completed gift for gift tax purposes; if the owner changes his mind about the beneficiary, the owner can change the designation at any time before death; and because the beneficiary has no interest in the property until the owner dies, the beneficiary’s creditors cannot reach the property. In contrast with the transfer of property under a revocable trust or a will, the transfer of property through a TOD deed is much less expensive. In some states the cost of probate is substantial, and in any state a probate proceeding will cost more than the fees associated with a TOD deed.”
Read the entire at: http://www.americanbar.org/newsletter/publications/gp_solo-magazine_home/gp_solo_magazine_index/realestate_transferondeath.html.
Susan N. Gary is a professor of law at the University of Oregon School of Law. She is an Academic Fellow and Regent of the American College of Trust and Estate Counsel, the preeminent U.S. organization for estate planning lawyers and academics.