What Are Some Problems With Transfer on Death Deeds?
The Ups and Downs of Using a TODD
Do you have concerns about your a Transfer on Death Deed? Are you worried that your loved ones will be unable to avoid probate with a TODD? Margaret Barrett discusses how a TODD works and whether or not you should be concerned about its use.
Concerned about your assets? Contact us today to learn more about what we can do for you to protect your investments.
What You’ll Learn From This Video
- A Transfer on Death Deed can come with certain pitfalls.
- Avoiding probate helps save your loved ones money, time, and emotional labor.
- Safe Harbor Estate Law can help you choose the right option for your estate.
HERE IS THE TRANSCRIPT FROM THIS VIDEO
Margaret Barrett: Can I be sure that a transfer-on-death deed will avoid probate? Many people have the goal of avoiding probate. And what is probate? Well, we’ve all heard you can’t take it with you. And sure enough, when you pass away, your assets need to be transferred out of your name and into the name of someone else. Probate is simply the court process where your assets get transferred out of your name and to someone else. They will go according to what your will says, and if you don’t have a will, then the state has a will for you and the law will determine who gets your assets in probate. Why do most people want to avoid probate? Well, first it’s expensive. It starts at about $5,000 in Minnesota and goes up from there. Second, it is time-consuming with delays, especially now that the courts are more backlogged. And third, it is a hassle for your loved ones.
So in Minnesota if you own real estate, you’ll automatically have a probate. You can avoid that by either putting your real estate in trust or by having a transfer-on-death deed or a TODD as we call it. There are times when TODDs worked very well to avoid probate and to get your assets to the people you want with minimal hassle. However, sometimes they can cause problems. And one of the problems can be that you don’t avoid probate after all. For example, we have a client, a widow who had a TODD on her house to her four children. Sadly, two of her daughters predeceased her. Under the TODD’s statute anti-lapse provision, those two daughters shares would go to their descendants. However, we had to go to court to get an order determining who the heirs were before we could sell the house and distribute the proceeds to the right people.
If this client had done a revocable trust and put the house in it, she could have avoided probate completely and actually saved money and hassle in the long run. Having one of your heirs die before you is one of the life events that can cause problems with a TODD, but in the right circumstances, they can be a very effective tool. We want to help educate you on the pros and cons of a TODD in your particular situation with your goals so that you can make the right decision for you. Please call us today. We would love to help you get started on protecting what matters the most to you.
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