You Can TOD Your RP!
In the spring of 2014, the Washington Legislature passed a bill authorizing transfer on death (TOD) deeds, allowing real property (RP) to be transferred outside of probate upon the death of the owner/grantor. Until this legislation, Washington real property could only be transferred on death through a probate procedure. Washington joins approximately half of the other states in the union allowing real property deeds to effectively name a beneficiary.
Effective June 12, 2014, the Revised Code of Washington contains Chapter 64.80, the Uniform Real Property Transfer on Death Act. In order to be valid, a transfer on death deed must:
- Have all the normal elements of a properly recordable deed
- State that transfer to the beneficiaries is to occur at the grantor’s death
- Be recorded in the county where the property is located prior to the grantor’s death
Here are some of the other key pieces of the legislation:
- In order for the TOD deed to be effective, the beneficiary must survive the grantor. If the beneficiary predeceases the grantor, the transfer lapses and the property becomes subject
- If the transfer on death deed names co-beneficiaries and one or more of them predeceases the grantor, the share of the deceased beneficiary will be split proportionally between the surviving beneficiaries.
- Conflict between a will and a transfer on death deed will be resolved in favor of the deed. A transfer on death deed cannot be affected by a “superwill” under RCW 11.11.
- If the property that is the subject of the transfer on death deed is jointly owned, the transfer on death deed will become effective only after the death of the last surviving joint owner.
- If the property is community property and the grantor is not joined in the transfer on death deed by the spouse or the registered domestic partner, the transfer on death deed only transfers the grantor’s share of the community ownership. The beneficiary and the surviving spouse/domestic partner then become tenants-in-common.
- If the property is community property and the grantor is joined in the transfer on the death deed by the spouse or domestic partner, the transfer is only effective if the spouse or registered domestic partner predeceases the grantor.
- A beneficiary takes the property subject to all encumbrances and expenses but does not become personally responsible for the debt. Importantly, this includes Medicaid liens for long term care that can be filed up to 24 months after the death of the grantor. Beneficiaries should note that the 24 month period is a good deal longer than the four month limit when proper notice to creditors is given through a probate proceeding.
- The transfer on death deed can be revoked by the grantor at any time, even if the deed’s explicit provisions state otherwise.
- A transfer on death deed naming a spouse as a beneficiary is automatically revoked if the spouses become divorced under RCW 11.07.010.
- The capacity necessary to execute a transfer on death deed is the same as that necessary to execute a will.
- A transfer by transfer on death deed can be disclaimed by the recipient.
- For income tax purposes, a transfer on death via deed is treated like any other transfer on death; the adjusted basis of the property is stepped up to its fair market value.
Barry M. Meyers
David M. Neubeck
Elder Law Offices of Barry M. Meyers
DISCLAIMER: The content of this newsletter is: for information purposes only, subject to change by government agencies, should not be relied upon as current, and, does not constitute legal advice. Reading this newsletter does not establish an attorney-client