Transfer on death deeds should never be used as substitutes as wills. These documents can play an invaluable role in your Oklahoma estate plan, however, because transfer on death deeds let a property avoid probate, among other advantageous features. While many people are familiar with wills and he role that they play in estate plans, people are often confused about transfer on death deeds and how they function.
How Do Transfer on Death Deeds Work?
Transfer on death deeds let a person transfer ownership in a piece of real estate to someone else at the time of the property owner’s death. The beneficiary of a transfer on death deed is similar to the beneficiary of a will. A person can name a single individual or multiple people to inherit property through a transfer on death deed.
Transfer on death deeds are revocable and a person can change the terms of a deed or even fully revoke it before the individual dies. A person must make sure to revoke a transfer on death deed in the same manner that the document was created.
Reasons to Think Twice About Transfer on Death Deeds
While transfer on death deeds are easy to create and particularly beneficial if you are interested in avoiding probate, these documents also have several disadvantages. Consider the following limitations about transfer on death deeds:
- Transfer on death deeds do not offer a title warranty, which means there is no guarantee that the person passing the property actually owns the real estate or has the right to transfer the property to you.
- Transfer on death deeds do not protect against estate creditors.
- Even if the real estate that you pass using a transfer on death deed does not pass through probate, the real estate might still be included in the valuation of your estate and factor into any applicable estate tax.
- Using transfer on deeds deaths in an effort to lower the value of your assets will not qualify as part of the Medicaid spend-down process because the property does not transfer while you are still alive. As a result, utilizing these deeds will not help you qualify for Medicaid.
The Advantages of Utilizing a Transfer on Death Deed
Many people find that transfer on death deeds are capable of satisfying various estate planning goals. Some of the advantages to creating a transfer on death deed include:
- Transfer on death deeds avoid probate, which can be time-intensive and costly.
- Establishing a living trust and passing real estate to this trust can also avoid probate. Establishing a trust, however, requires a much more complex process. Transfer on death deeds are much easier to establish.
- Various homestead advantages are not lost through transfer on death deeds.
Contact a Knowledgeable Estate Planning Lawyer
Estate planning is a nuanced process. While it can be difficult to decide what estate planning strategies would work best for you, a knowledgeable attorney’s help can prove invaluable. Do not hesitate to contact attorney Jim A Lyon today to schedule a free case evaluation.