What Is A Transfer on Death Deed?
So before wrestling with the question I’ve been pondering, why don’t we have transfer on death deeds in Maryland, I will briefly explain what a transfer on death deed is.
Sometimes the simplest explanation is right in the name. A transfer on death deed transfers the property to the upon the death of the of the property owner to the designee.
Can You Give Us an Example?
Sure. Let’s say your Rich Uncle that owns a home in a State that recognizes transfer on death deeds, deeds you a property. Upon his death, you become the owner. It’s that simple.
What Are The Benefits of Transfer on Death Deeds?
So, there are a few benefits. It might be the most practical and inexpensive method to avoid the trouble and expenses of probate. I’ve worked probate cases and I’ve drafted many deeds, I know first-hand that both the financial and time commitment to draft and record a deed is much less expensive than the probate process.
Transfer on Death Deeds VS Revocable Living Trusts and Life Estate Deeds?
I typically recommend using revocable living trusts or life estate deeds to avoid probate in Maryland but transfer on death deeds has some advantages over these options as well.
A revocable living trust plan is a lot more expensive than a deed transfer. In addition, the creation of a trust is the creation of a legal entity that requires maintenance.
A life estate deed is the closest tool in my toolbox that I have to replicate a transfer on death deed, where upon the death of the grantor the grantee becomes the owner of the property. So, I can use it to achieve the same outcome as a transfer on death deed.
But life estate deeds have drawbacks that transfer on death deeds do not have. They create a present interest in the property which may be subject to gift taxes. In addition, creditors of the beneficiary may attempt to seize their interest in the life estate as a collection method.
Transfer on death deeds avoid the drawbacks of life estate deeds because they do not reate a present interest.
Why Don’t We Have Transfer on Death Deeds in Maryland?
So hopefully by now you’ll see that transfer on death deeds is a power alternative option. But as you probably guessed by the title of the article, transfer on death deeds are not valid in the State of Maryland. For now, you’ll have to use the options I discussed above in order to avoid probate.
But that brings me to my question, why don’t we have transfer on death deeds in Maryland? Let me be clear here, I have no idea why we don’t have this option. I don’t make the rules. But perhaps I can use my platform to bring awareness to the issue and create change.
People In General Don’t Think Transfer on Death Deeds is An Urgent Matter
We all die one day. The very last day of our life. I think people in general focus on issues facing them in the present and not in the future. Perhaps if the Thanos snap happened and half us suddenly disappeared a transfer on death deeds would get more buzz than the latest Trump tweet. (But of course this would open a new can of words when the vanished come back).
We can get transfer on death deeds in a snap of the fingers of our legislators. But they have not felt been pressured enough by our legislators.
People Don’t Like Thinking About Their Death
I think estate planning in general can be an uncomfortable experience for many because there are many people that don’t like thinking about their death. In fact, there are some people that just won’t get an estate plan. This is another reason why I think transfer on death deeds would be awesome. People can select beneficiaries for life insurance policies or bank accounts that pass outside of probate in Maryland, and many do. A transfer on death deed is similar to those options that many Marylanders take. It would be an additional tool in the estate planners toolbox to address these people.
That said, the very people a transfer on death deed would help the most are not fighting for it. Because they’re the ones that aren’t thinking about their deaths.
Not Having Transfer on Death Deeds Benefits Someone Other Than The People
A question I think we should consider is who benefits from us not having transfer on death deeds? I do not think that it is an accident. Who profits from the People not having transfer on death deeds? Do the probate courts want to make sure they get fed? Do mortgage companies dislike the process? Do attorneys prefer more expensive options? Is it easier for the Government to collect taxes? Do the T.V. producers want a television show where heirs fight over an estate?
Someone benefits from the people not having access to transfer on death deeds, and it’s not the people.
How Do We Get Transfer on Death Deeds In Maryland?
By pressuring our representatives to push forward a bill. Here is an easy way to find out who your representatives are. I will be do my part and contact mine. Contact yours. Our legacy literally depends on it.
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