Transfer-on-Death Deeds are a great tool to have in our estate planning toolbox … IF used properly.
The dangers of this document, however, are many. If prepared by someone who does not know what they are doing or does not have all of the facts, it may be far too late to undo the mess by the time mistakes are discovered.
To be clear, I am not saying that it is impossible for a lay person to fill out this document. The form itself isn’t the only benefit estate planning attorneys such as myself offer. What we can provide is knowledge – knowledge of the legal requirements of the document itself, knowledge of all of the things (both practical and legal) that can go wrong.
For example, what are the potential downsides of naming multiple beneficiaries? What about naming one beneficiary with the “understanding” they will share the property with someone else? How could this document affect someone’s need-based government benefits? What mess will be created if a minor child or incapacitated person receives an interest? Is a direct transfer the best option or would it be less messy for the property to pass through a Will or trust? What are the requirements for when/where it needs to be filed? All of these questions are based on very real issues that have arisen from the execution of Transfer-on-Death Deeds, resulting in high costs, heartbreaking family conflict, and other serious consequences that can’t always be undone even with everyone’s cooperation.
I will also add that it is a mistake to utilize this document as your ONLY estate planning tool. People often think they have all of their ducks in a row, but the family learns later that some items still end up in the estate, requiring probate court to transfer. Having a Will, Durable Power of Attorney, Medical Power of Attorney, Declaration of Guardian Before Need Arises, Designation of Guardian for Children, Appointment of Agent for Disposition of Remains, Directive to Physicians, and possibly a Living Trust, if appropriate, can ensure maximum protection for yourself and your family in the event of incapacity or death. Sometimes probate can be avoided, sometimes it can’t. Sometimes it is worth trying to avoid probate, sometimes it isn’t. There is no one-size-fits-all estate plan.
