A transfer-on-death deed transfers your property to a designated beneficiary after your death. For example, you can use a transfer-on-death deed to transfer your home to your child upon your death. Estate planning laws allow other methods of property transfer, but transfer-on-death deeds have numerous advantages. Below are some of the advantages.
The Property Avoids Probate
Your home won't have to pass through probate if you create a transfer-on-death deed for it. Probate is the legal process of carrying out your wishes after death. Probate involves:
The probate process involves time and money. The process also risks beneficiary disagreements. For example, some beneficiaries might disagree on the value of properties. Create a transfer-on-death deed for your home and avoid all that.
You Maintain Interest on the Property
One of the best things about transfer-on-death deeds is that they do not give beneficiaries rights to your properties while you are alive. You maintain total ownership of the property until your demise. Interest retention means you can:
Some estate planning processes give beneficiaries interest in your property while you are still alive, creating problems. For example, a beneficiary might complain if they think your renovations reduce the property's value.
You Can Modify the Deed
Some estate planning processes are irrevocable. However, you can modify a transfer-on-death deed any time you wish. That is, you can:
The ease of modification means you do not have to worry if your wishes change in the future, which is entirely possible. For example, you and your beneficiaries are not the same people you were twenty years ago.
The Deed Is Simple to Use and Create
Lastly, the transfer-on-death deed is relatively easy to create, modify, and use. All you need to create a transfer-on-death deed is to:
The above is a general overview, and the exact requirements vary by state.
The named beneficiary automatically receives ownership of your home should you die. The beneficiary also receives any lien or debt the property has, such as a mortgage.
An estate planning lawyer can help you create a transfer-on-death deed. The lawyer can also advise and help you with other estate planning processes.
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