Probate is a time-consuming, expensive property, especially if you have significant assets and no solidified estate plan, including a will or trust. However, you may wonder about a transfer on death deed.
This type of deed allows you to designate a beneficiary for specific real estate holdings, and when you die, this property is automatically transferred. These are some things you should know about transfer on death (TOD) deeds.
The most significant benefit of TOD deeds is that these properties do not have to go through probate. Your beneficiaries may also avoid estate taxes because these properties are not included in the estate valuation process. In addition, in some states, these individuals could avoid gift taxes.
You can create these deeds quickly and easily, and you can revoke them if you change your mind.
Not every state allows TOD deeds. However, both Illinois and Missouri do have TOD laws. In addition, if you own property with someone else, that person will typically become the sole owner of the property even if you have a TOD deed. In addition, these deeds could prevent your heirs from selling or mortgaging the property for up to three years. Finally, minor beneficiaries need to have court-appointed custodians who will manage the child’s property and inheritance until they become legal adults at the age of 18. In these cases, a living trust may be a better solution.
Tips for successful transfers
Make sure you are the single owner of your property. Then, prepare, sign and notarize the deed before you file it with your county’s land records office. Check your state rules because you may need witness signatures or need to meet filing deadlines.
To encourage a successful transfer, discuss the transfer process in your state and county with your beneficiaries.