Many individuals are concerned with the cost of probate and wonder if there is any way to avoid the probate process. Depending on the size of individual’s estate, it may be possible to avoid probate. For those individuals whose estate consists of a residence and personal property, a Transfer on Death Deed may be the right answer to avoid probate. Below are some commonly asked questions:
I already have a Will. Why would I want a Transfer on Death Deed?
If your home is the only asset in your estate, you will need to go through a probate proceeding to transfer title to your heir(s). A Transfer on Death Deed transfers title to your house in the same fashion as a beneficiary designation on a life insurance policy, so you avoid the time and expense of a probate proceeding. In addition, Medicaid cannot reach the house to obtain repayment of Medicaid benefits.
What is the Medicaid estate recovery program (“MERP”) and how does it affect the Transfer on Death Deed?
For persons aged 55 or older, states are required by Federal law to seek recovery from a decedent’s estate of payments made on behalf of the decedent for benefits such nursing facility services, in-home care, hospital services, and drug services. When a will is probated, the executor is required by Texas statute to notify Medicaid that an estate has been opened, thereby providing Medicaid with the opportunity to file a claim against the estate to recover the benefits paid. Property passed by a Transfer on Death Deed is Exempt from a MERP claim.
Can a Transfer on Death Deed take the place of a will?
It depends. Where the only other assets are personal and household property with a value under $75,000, a Transfer on Death Deed may be sufficient. If you wish to make bequests to a charity or relative, or have substantial assets in the form of personal property, such as jewelry or firearms collection, a will remains an important part of the estate planning process.
Are mineral interests and timber considered real property?
Yes. Real property includes mineral interests and uncut timber. Real property also includes land, and improvements on the land such as a house and barn. Personal property, on the other hand, are things which are not permanently attached to the land and can be easily removed. Personal property cannot be disposed of by a Transfer on Death Deed.
How can I transfer my property without going through probate?
If you have financial accounts such as stocks, mutual funds and retirement accounts, you can designate a beneficiary or beneficiaries who will inherit the account balances after your death. You can also designate an alternate beneficiary. Normally the beneficiary simply completes a claim form and presents it with a death certificate to the institution to receive payment of the account balance. Savings and checking accounts can be transferred by naming a “payee on death” who is the beneficiary of the account balance. In addition, you can name the beneficiary as a joint owner of the account. Upon your death, the joint owner inherits the account balance.
What are the requirements for a Transfer on Death Deed?
It must be in writing, include a legal description of the property, the commonly known address, the name and address of the designated beneficiary(ies), state that the transfer of the Grantor’s interest to the designated beneficiary(ies) does not occur until the Grantor’s death, and then must be executed in the presence of a notary and recorded in the county where the property is located.
If you are interested in exploring the possibilities a Transfer on Death Deed, contact your attorney.