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What Are the Pros and Cons of Transfer on Death Deeds?

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It is important to consider the pros and cons of transfer on death deeds while estate planning in West Virginia. Transfer on death ("TOD") deeds became legal in West Virginia in 2014 with the passage of the Uniform Real Property Transfer on Death Act. There are advantages and disadvantages to using this estate planning tool.

Several Pros and Cons of Transfer on Death Deeds

When considering your estate planning options in West Virginia, there are several different ways to designate who should receive your property after death. West Virginia has legalized TOD deeds by enacting the WV Real Property Transfer on Death Act. Previously, a property owner would most likely have named a beneficiary by creating a life estate with a remainder interest, a more complicated option usually involving a property lawyer.

Transfer on Death Deeds and Life Estates

The primary advantage of a transfer on death deed is to avoid the probate process. If a property owner has executed a transfer on death deed, then as soon as the property owner dies, that property passes to the person named. The beneficiary does not have to go to court. He or she immediately owns the property by operation of law.

Another advantage of using a transfer on death deed is that the grantor would fully and freely own the property until his or her death. If the grantor instead created a life estate with a remainder interest, the beneficiary would have an interest in the property during the grantor's lifetime. This means that the beneficiary would have to consent to any financial decisions regarding the property like these:

· Liens;

· Mortgages; and

· Sales.

In addition, if the property were sold, the life estate remainder beneficiary would have a right to a portion of the proceeds of the sale.

Another pro of using a TOD deed is that it avoids the requirement of beneficiary consent to beneficiary status. With the life estate-remainder option, the beneficiary must accept his or her role as the beneficiary and be willing to take the property. With a transfer on death deed, that is not the case. The beneficiary does not need to give permission. The property owner may change the beneficiary at any time. And because the beneficiary of a TOD deed has no interest in the property during the grantor's lifetime, the beneficiary's consent is not required for any financial transactions involving the property.

Effect of Transfer on Death Deed on Medicaid

When adults need long-term care, there are several options. They may have the financial resources to afford private care. They may have family that can provide care. Long-term care insurance could help with many of these costs. However, some adults require Medicaid to cover the cost of long-term or even acute care as they age.

Medicaid covers this cost for low-income patients or for patients with high medical bills relative to their overall assets. However, after the patient dies, Medicaid often seeks reimbursement from probate assets. In this way, Medicaid provides an interest-free loan when it covers the cost of long-term care. It collects on the loan after death.

A TOD deed may protect the patient's property if Medicaid is involved because the property is immediately transferred to the beneficiary after the owner dies. As a result, the property is not part of the estate.

How to Execute a Transfer on Death Deed

If you choose using a transfer on death deed in your estate plan, know that it must be legally executed. A TOD deed must meet the requirements of West Virginia law. While many other states have enacted the Uniform Real Property Transfer on Death Act and have included statutory forms to make this process simple, West Virginia did not include forms in its law.

However, the knowledgeable attorneys at Jenkins Fenstermaker, PLLC can provide detailed advice regarding the pros and cons of transfer on death deeds, how your estate is likely to be affected by Medicaid, and other estate planning issues.

Anna M. Price, an experienced WV estate planning attorney, is available to counsel you on the pros and cons of transfer on death deeds and to help you navigate the complexities of your estate planning options in WV. If you are starting your own estate planning or helping a loved one, please contact Anna by completing her online contact form or calling her s locally at 304.521.4571 or toll free at 866.617.4736.

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