By Beth A. McDaniel
A transfer on death deed allows a beneficiary to receive a parcel of real estate upon the death of the owner(s). This type of deed has existed in Washington since 2014. The transfer on death deed is recorded while the property owner is still alive. The deed names a beneficiary who will receive/own the property upon the property owner’s death. Upon the death of the owner, the beneficiary submits a death certificate and real estate tax affidavit to the recorder of the county in which the property is located. The current fees for submitting these documents to the recorder are about $54.00. It is also important for the beneficiary to take steps to get the homeowner’s insurance in their name as soon as possible
A recorded transfer on death deed supersedes any later attempt to distribute the real property by a Will.
A transfer on death deed avoids probate for the sole purpose of transferring the property. A transfer on death deed may make sense when there is one beneficiary or a few beneficiaries who get along well and have the same objectives for the property.
A transfer on death deed is likely not advisable when there are multiple beneficiaries, minor beneficiaries, beneficiaries who may not have the means to maintain the property, or disabled beneficiaries. I think back to a case where my client was left a life estate* in a residence owned by his late wife and decided following her death that the house was too much for him to maintain. To sell the residence, his six stepchildren needed to sign off the sale of the house. Getting their cooperation was extremely difficult. If I recall correctly, we had to petition the court for the appointment of a special master (typically a real estate lawyer) to sign the deed on behalf of the uncooperative stepchildren. In short, a transfer on death deed is likely is not advisable where there are multiple beneficiaries who may have competing interests or equal abilities to maintain the property.
Moreover, a transfer on death deed may not advisable if the intent upon death is for the property to be sold and the proceeds distributed among several individuals, charities, and/or to pay the tax and/or creditor obligations of the estate. Having a transfer on death deed would not avoid an estate or income tax obligation and could create complications for the fiduciary who has the responsibility to assure that the tax obligation is paid
If a transfer on death deed is executed, the transfer should be referenced in the property owner’s Last Will, as they likely would not want their personal representative to spend thousands to probate the Will only to learn after the fact that probate was unnecessary. Also, keep in mind that the Will contains the ‘back up plan’ as to what will happen with your property, should the transfer on death beneficiary predecease the property owner
If avoiding probate is the main objective for a transfer on death deed, a revocable living trust should also be considered. If all the assets subject to probate are in the trust name prior to the death of the Trustor (creator of the trust), probate can be avoided all together. There are other options to life estates, like trusts – a topic for a future newsletter.
Disclaimer: this newsletter is informational only and should not be construed as legal advice.
If you have questions about leaving property to a relative, guardianship/conservatorship, or would you like to discuss your estate plan, please contact our client care specialist, Margo Passeau, directly at (425) 296-3121 or by email at margo@bethmcdaniel.com
First Published: July 2023