Understanding Virginia’s Transfer-on-Death Deeds for Real Estate
Your home is among your most important assets. The process of estate planning usually involves looking for the most effective way to transfer real estate holdings to heirs. An example of one such method is a Transfer-on-Death (TOD) deed. However, there are other alternatives that may work better in some cases.
Knowing how a TOD works and its benefits and drawbacks will help you decide whether it is suitable for your interests.
What is a Transfer-on-Death deed?
With a TOD deed, an owner is able to designate one or several persons to inherit their property right after death. As long as the owner is alive, however, nothing happens. In other words, the owner still controls the property, occupies it, can sell it, refinance it, or cancel the deed if they want.
Since the transfer takes place after the death of the owner, property can be inherited without the probate process.
Benefits of a TOD deed
There are numerous benefits to executing a TOD deed for some people.
For one, it enables the owner to have total control of the property while they are alive. Compared to adding another person as a joint owner, a TOD deed will not confer any ownership rights in the property on the beneficiary while the beneficiary is alive.
Moreover, since there is no probate involved, homeowners can save time and money.
Lastly, since the deed can be revoked by the homeowner in the future if need be, then there is more flexibility.
Limitations of TOD deeds
Although TOD deeds can serve as an effective tool in certain cases, it isn’t suitable for all estate plans.
For instance, the designation of several beneficiaries might cause problems when a particular beneficiary passes away before the property owner, or in cases where there is a dispute regarding whether the property should be sold or kept. Moreover, a TOD deed will not give any guidance on what to do with the property if the owner becomes incapable of managing it while alive.
Furthermore, even if real property is transferred outside the probate process, it still will not remove all debts, tax payments, or creditors’ claims against it. The beneficiaries will receive this property with all these liabilities.
A trust can offer greater flexibility
In many cases, using a revocable living trust offers much more comprehensive planning than a TOD deed does. The trust can hold several properties, provide directions for managing them, allow for incapacity, and distribute assets gradually rather than in one go.
Furthermore, trusts may be used to address blended families, to care for beneficiaries who require ongoing financial monitoring, and to ensure that the estate, not just one property, is distributed.
Talk to a Virginia Beach, VA, Estate Planning Lawyer Today
The Law Office of Angela N. Manz represents the interests of Virginia Beach residents who are looking to establish or update their estate plan. Call our Virginia Beach estate planning lawyers today to schedule an appointment, and we can begin going over your options right away.