From a respected WealthCounsel colleague:
The Good: The new TOD Deed
- Will be simple to use;
- Will be less expensive than creating a Living Trust;
- Will eliminate the time and expense of a probate;
- Will remain revocable during the lifetime of the grantor; and,
- Will greatly simplify the transfer process at death.
- Because it dispenses with post-death transfer formalities, it may reduce or eliminate the acrimony among heirs or beneficiaries which sometimes accompanies a formal probate or trust administration.
The Bad: The New TOD Deed
- Offers no protection from the grantor’s creditors;
- Can only be used for a residential property of up to four units or sitting on up to 40 acres of agricultural land.
- Does not permit the designation of beneficiaries by class description (e.g., “my children”);
- Cannot designate contingent beneficiaries: If a designated beneficiary predeceases the grantor, the property goes to the other surviving beneficiaries or, if none, then it reverts to the grantor and may then require a probate;
- Cannot be used to transfer residential property held as Joint Tenancy or as Community Property with Right of Survivorship;
- Unlike a “Living Trust”, cannot be used to manage, sell, or borrow against the residential property during the grantor’s incapacity;
- Title Insurance Companies have indicated a reluctance to insure clear title until the running of three (3) years after the death of the Grantor. During this time, the beneficiary will likely be unable to sell or borrow against the property;
- Validity requires strict adherence to the statutory form. Any deviation might render the deed void. Example: Some title companies require that the Q&A’s, which accompany the form in the statute, also be recorded;
- Most importantly, there is concern among some advocates that the availability of this simple transfer deed will facilitate the commission of elder abuse upon frail seniors.
Source: New Transfer on Death Deed; An Alternative to a Living Trust ?
