Some states allow you to use a beneficiary deed, also known as a transfer on death or TOD for real estate, to transfer real property upon your death. This estate planning tool avoids the legal rigmarole of probate and the potentially high costs of creating a trust for the same purpose.
Using a beneficiary deed to transfer real estate may very well be a good estate planning move on your part. State laws vary as to its legal creation, so it’s best to have an attorney licensed in your state of residence help you with the paperwork and explain any alternatives.
If you are a do-it-yourselfer,
be sure and follow all procedures and rules. Most states require recordation of
the deed to make it legal.
After recording your deed and making it official, what happens if you change your mind? A beneficiary deed affords you complete control during your lifetime. You can revoke it, replace it with another, or change the beneficiaries.
The deed has no affect until
your death. That means you enjoy complete control of the property while you’re
alive. The beneficiary doesn’t even have to know about the inheritance (unless
you decide to tell them).
Upon your death, the property doesn’t have to go through probate like it would if you left it through your will. Usually all that's needed is a death certificate to necessitate the transfer of the property to your named beneficiary.
Probate can be long and expensive. Your beneficiary won't receive title to that property until years after your death if you bequeath it through your will.
District of Columbia
If your state allows it, a beneficiary deed may be the best way for you to pass along real estate seamlessly and inexpensively to your loved ones. Make sure your transfer on death deed is a part of an overall plan that takes into consideration your estate plan objectives, and that it is properly drawn and recorded.