Owners of real property will soon be able execute and record a “Transfer on Death” deed enabling an owner to pass property to one or more beneficiaries at the owner’s death without probate or transferring the property to a trust. In addition to the standard deed requirements, a Transfer on Death deed must (1) state that the transfer occurs on the owner’s death, (2) contain certain statutory warnings, and (3) be properly recorded during the owner’s lifetime. Until the death of the owner, beneficiaries have no interest in the property solely by being named a beneficiary. Transfer on Death deeds can be revoked by disposing of the land, recording a revocatory instrument, or recording a subsequent Transfer on Death deed naming a different beneficiary. LB 536 becomes operative on January 1, 2013.
Keep in mind that trusts may still be a more effective method of transferring property as trust can provide for contingencies such as what should happen to property when a beneficiary predeceases you or is incompetent. Trusts have other advantages over transfer on death deeds as well but the new law is a welcome improvement for many situations.
© 2012 Parsonage Vandenack Williams LLC
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