ESTATE PLANNING UPDATE: 2008
Important New Estate Planning Tool
From our Summer 2008 Newsletter
Effective August 1, 2008, Minnesotans will have a new tool in their estate planning toolbox--the Transfer on Death Deed. This progressive legislation provides a new opportunity for people to transfer real estate upon their death without the need for probate. Minnesota follows ten other states that have approved the use of Transfer on Death Deeds.
A Transfer on Death Deed allows a person, known as a "grantor," to sign and record a deed that transfers real estate directly to named beneficiaries when the grantor dies. The deed must be recorded prior to the death of the grantor to be effective. Upon the death of the grantor, the transfer of the real estate occurs automatically without the need for a probate (although a probate proceeding may be necessary to transfer other assets of the estate).
A Transfer on Death Deed doesn't transfer any interest in the real estate to the beneficiaries until the death of the grantor. The grantor retains full ownership rights while living, including the right to revoke the deed or sell the property to someone else until his or her death. Because the beneficiary has no ownership interest in the property until the death of the grantor, the property is protected against potential claims by the beneficiary's creditors, divorce proceedings, and other risks of joint ownership of real estate.
A Transfer on Death Deed does not shelter the real estate if the grantor or the grantor's spouse must apply for Medical Assistance (Medicaid).
There are additional benefits and risks of the Transfer on Death Deed. It will not be an appropriate estate planning tool for everyone but may provide a new approach in some cases.
If you have questions about how the Transfer on Death Deed may fit into your estate plan, please contact one of the attorneys in the Henningson & Snoxell Estate Planning Department
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Susan Peterson, Chair
