An Alternative to Probate: Death Deed Transfers

While probate is normally the best way to divide a decedent's estate, there are other ways to handle assets without going through this process. One option is called a death deed transfer. This method is allowed in at least sixteen states: Arizona, Arkansas, Kansas, Colorado, Hawaii, Illinois, Missouri, Minnesota, Montana, Nevada, New Mexico, North Dakota, Ohio, Oregon, Oklahoma and Wisconsin. Starting in 1995, it was introduced as an alternative to probate. It involves signing a new deed for your house before death. If you live in a state where these deeds are legal, you can create a new house deed and then add your signature in the presence of a notary to make things official. The deed must be recorded at the court house in the county where your property is.

With this document officiated, your home and land will be automatically transferred to the party that you named as a beneficiary on your death deed transfer. This will not only eliminate the delay of a court-mandated probate but the costs as well. Your beneficiary will merely need to record an affidavit and present a death certificate with the county recorder in the event of your passing. When you choose a death deed transfer, you can retain all ownership interests for the remainder of your life, and do whatever you want with the property.

You can change the designated beneficiary without his or her permission, or you can dispel the death deed transfer and sell your property. One of these transfers also protects your assets from any financial troubles your heirs are dealing with. With this process a creditor cannot place a lien on your property, and your heirs cannot transfer, mortgage or pledge their interest on your property while you are living. Essentially, they have no rights to the property until you have passed on.

Death deed transfers aren't always the best decision. They are not exempt from estate tax, so your beneficiaries will still need to pay state and federal taxes. The executor of the deed will be required to pay the taxes within a limited time after your death. A transfer on death deed cannot protect your real estate from your creditors during your lifetime. Any liens or debts that you accumulate will be transferred over to your beneficiaries at the end of your lifetime.

Also, a death deed transfer can create conflict among heirs. If you name more than one person on the transfer form, then there can be more expense and conflict as your family battles for rightful shares. In the event that your beneficiary passes away, his or share of the estate is terminated, and it may not transfer to his or her heirs. If there is more than one transfer on the deed, then the remaining heirs will divide the share equally. If no designated beneficiary survives the person who made the transfer on death deed, then the estate will become a part of probate.

If you decide on a death deed transfer as opposed to a probate process, you will want to get a lawyer involved. A probate attorney can impart wisdom on the option of a death deed transfer and help you figure out if this truly is the best choice. As well, if you do go through with a dead deed transfer, an attorney can give you the standardized deed form and help you to outline it according to state regulations. Since only a few states provide this option, probate is the better choice for most. Talk with a probate lawyer to discuss the option of a death on transfer deed.