Owning real estate is one of the many ways that people wisely choose to invest their hard-earned money.  Owning your own home, vacation cabin, or investment property can be a good way to help secure your assets and properly plan for the future.  Real estate ownership makes estate planning even more important.  Proper estate planning can help simplify the necessary procedures for your friends and loved ones after your death.  It can also mean that the tax liability for your estate is minimized.  One tool that can be used is a “transfer-on-death” deed.

A transfer on death deed, also called a beneficiary deed, allows for the automatic, direct transfer of real property to a named beneficiary upon your death.  This often, but not always, means that the property will pass outside of probate.  These deeds also allow the current owner to retain all ownership rights during his or her life.  For example, if you want your daughter to receive your vacation home when you die, you can execute a transfer on death deed naming her as the beneficiary.  This allows you to retain ownership during your life while also letting your daughter receive the vacation home quickly and simply after your death. It also means that your daughter does not have a right to the vacation home during your life.  You can continue to use it, improve it, or even sell it during your lifetime.  You can also revoke the beneficiary deed at any time.

There are some limitations on beneficiary deeds.  You cannot use a beneficiary deed to transfer your interest in real estate if you co-own the property with one or more individuals.  A beneficiary deed will also not avoid liens or mortgages.  The mortgage or debt will have to be settled before the named beneficiary can receive full ownership rights.  Using a beneficiary deed may also mean that the recipient loses his or her Medicaid eligibility.  Furthermore, although one main benefit to a transfer on death deed is that the property may pass outside of probate, your estate may still require probate for other assets such as a savings account held solely in your name, investments, or other real or personal property.  This truly highlights the importance of a careful review of your estate plan with an experienced attorney, as failure to understand the limitations of a transfer on death deed could result in negative, unintended consequences.

We have extensive experience in assisting our clients understand their options for passing on their assets to their friends and family.  Contact us today so we can talk to you about your assets and our solutions for your estate.