Does a Transfer on Death Deed Address My Goals?

The Uniform Real Property Transfer on Death Act, House Bill 147, allows owners of Delaware real estate to execute and record a Transfer on Death (TOD) deed designating one or more beneficiaries who will receive the real estate upon the owner’s death, without a probate procedure.

The Act outlines the following:

• Transfer on Death deeds will take precedence over any other instruction, including those in a Will
• Provides the forms needed to create or revoke a TOD deed
• Creates a procedure for beneficiaries to notify the Register of Wills office of a death
• Ensures property subject to transfer is covered by insurance up to 60 days following date of death

Does this new law limit the benefits of a Trust(s) and other estate planning? No. Consider the following:

Geographic Limitations: Delaware residents should title their in-state and out-of-state property in the formal name of their Trust, ensuring probate avoidance in Delaware and in the other state(s). This Act addresses DE real estate only.

Limited Asset Coverage: While TOD deeds can prevent real estate from being exposed to probate, they won’t help avoid probate on any other assets, including cash accounts, investments, and personal property.

Reduced Flexibility: Unlike Trusts, TOD deeds don’t allow for customizations.

• There are no sale provisions in this designation, meaning real estate transfers as-is to beneficiaries, even if selling and distributing cash proceeds would be more practical.
• There are no contingency designations, addressing what should happen if named beneficiaries predecease the owner.
• There’s no allowance for custom directions in case beneficiaries are experiencing divorce, bankruptcy, lawsuits, the need for public benefits, and more at the time of inheritance.

Forced Co-Ownership: When multiple beneficiaries inherit real estate as joint owners, the arrangement can lead to disagreements about property use and maintenance, financial strain derived from different owners’ ability to contribute, and a requirement for all owners to agree on each decision. Forced co-ownership can be a recipe for conflict.

Exposure to Long-Term Care Costs: TOD deeds can’t shelter real estate from being exposed to, or depleted on, the costs of long-term care such as in a skilled nursing facility.

Consider Current Trends in Deed Fraud: While using a Trust does not prevent deed fraud, the formality could make a person with malicious intent feel more caution. Additionally, if the Recorder of Deeds received a TOD deed filing for property already titled in Trust, this could raise red flags. Since Trusts designate beneficiaries and provide directions, there wouldn’t be a logical reason for a TOD deed form to be filed. This inconsistency could prompt closer scrutiny and help prevent fraudulent filings from being processed.

Procino-Wells & Woodland, LLC is a Delaware estate planning and elder law firm with offices in Lewes and Seaford, DE, and virtual services available statewide. Michele Procino-Wells, Esq.,  Amber B. Woodland, Esq., and Katie S. Bole, Esq., focus in only this area of the law and constantly increase their knowledge through training to remain well versed in the newest planning opportunities and changes to the state and federal laws. The large staff take a team approach to each client’s case under direct advisement of the attorneys. Clients can expect fixed fee billing that is proposed upfront during the non-attorney initial consultation and accompanies a specific scope of work for the services that will accomplish that client’s goals. The firm uses virtual platforms to accommodate families who prefer not to meet in person, for any reason. You may learn more about their firm by visiting the website, www.pwwlaw.com, and be sure to click on the Upcoming Events tab where they offer a number of free educational events.