I recently saw a post written by a funeral home in Massachusetts about a transfer on death deed, that seems to have gone viral. According to Facebook, the post was shared over 83,000 times.

That’s how I saw it; because people who I know shared it. Unfortunately, while there are some really helpful tips in the post, the information is not entirely accurate.

Are TOD Deeds Legal in CT?

There are a couple of lessons that I think are important to point out and share. Let’s see if we can get this shared 83,000 times.

Most importantly, for my Connecticut friends (because this is where I practice and the law that I know), Transfer on Death Deeds are not legally authorized here.

Maybe someday they will be; there have been bills proposed in recent years, but nothing has passed yet. The recommendation from the funeral director was to execute a Transfer on Death Deed to avoid probate.

 

Related Post: Why You Don’t Need The Original Deed To Your House In Connecticut

 

Does a Transfer On Death Deed Avoid Probate?

Probate avoidance is not necessarily a bad idea, but it is something to be considered and executed as part of a well-thought-out estate plan.

If probate avoidance is the plan of choice, then to do that in Connecticut, real property has to be titled jointly with rights of survivorship (and then, it only avoids probate upon the passing of the first joint owner to die) or titled in a Trust.

There are various types of trusts and deciding which kind to use is another important decision that should be explored with a professional who understands the differences and can explain the pros and cons and make a recommendation based on your goals.

In the funeral director’s post, the acronym “TOD” was used to describe a Transfer on Death Deed. TOD stands for Transfer on Death for assets that are not real property as well.

For example, if you have an investment account, you can sign documentation with the financial advisor to name certain people as “Transfer on Death” or TOD beneficiaries. This is another probate avoidance tool.

 

Related Post: Probate Avoidance Mistakes

 

Probate Avoidance Tools Besides a Transfer on Death Deed?

And, as discussed above, choosing to avoid probate is not necessarily a bad idea, but despite the funeral director’s exuberance for naming beneficiaries to all of your accounts, I caution you before you name beneficiaries on all of your liquid assets to avoid probate, especially if you own a piece of real property and do not set up probate avoidance for that asset. Here’s why:

• If all of your liquid funds avoid probate and pass directly to your named beneficiary, your Executor, who has the authority and responsibility to manage your real property, will have no funds to take care of the property. This could cause hardship for the Executor and could mean that the real property is not managed properly and could lose value.
• Also, if you have any concerns about the maturity of a named beneficiary, you lose the ability to place restrictions on their use of the funds if you name them as direct beneficiaries. Even if you have a Will and a Trust signed that says that the funds for beneficiaries under a certain age will be managed by a trusted relative, if you name that immature person as a direct beneficiary, the financial institution has to send him or her the check, payable to them, and they get to choose how to spend the money.

 

Related Post: Another Reason To Put Your Property In A Trust

 

Finally, please keep in mind that the estate and probate laws differ from state to state, so it is important to pay attention where you are getting your information from. An estate planning attorney licensed in the State where you reside is the best person to help you map out and execute a plan that addresses your goals.

If you reside in Connecticut and are interested in having your plan reviewed or started, give us a call at (860) 669-1222. We can help!

Disclaimer: The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only.

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