Transfers Outside of Probate

09.01.2021

Author: Attorney Thomas J. Casey

Transfers outside of Probate can be an essential part of someone’s Estate Planning.  If used correctly, they can make the plan much less complicated and save considerable expense.  Without proper planning and guidance, however, they can lead to increased costs, legal proceedings and frustration.  I was recently reminded of this when meeting with a prospective client whose mother recently passed away.

It seems that her mother made arrangements with her bank to provide a Payable on Death (P.O.D.) designation on all of her checking and savings accounts so that the monies would be paid directly to her children upon her death without having to pass through any type of probate proceeding.

She also made arrangements with her financial advisor to have a Payable on Death (P.O.D.) or Transfer on Death (T.O.D.) designation on all of her investment accounts to transfer those funds to her children directly on her death, rather than having to go through any type of Probate proceeding.

At that point, the person told her children that she had taken care of everything so there would not be any need to have a Probate when she passed.  She did not consult with an attorney to confirm her Estate Planning.  Upon her death, the children found that nothing had been done to convey the real estate that their mother owned as her residence.

Consequently, the children were required to hire an attorney and commence a Probate action to convey the real estate, incurring a fairly substantial expense.

One solution to avoid such a problem is called a “Non Probate Transfer at Death”, sometimes referred as “Transfer on Death Deed” or “T.O.D. Deed”.  The purpose of the Non Probate Transfer at Death is to allow for an asset (such as real estate) to be transferred directly to named beneficiaries.  This document is relatively simple and inexpensive to prepare.  After signing, it is recorded with the Register of Deeds Office.  It takes effect upon the death of the Owner and allows the real estate to be transferred directly to the named beneficiaries without any type of Probate proceeding.

The named beneficiaries do not receive any rights or interest in the real estate during the lifetime of the Owner.  The Owner can sell the property, or amend or revoke the document at any time.  If it remains in effect at the death of the Owner, it works as a very efficient method of transferring real estate at death without the need of any Probate proceeding.