August 22, 2017
Wisconsin’s Transfer on Death Deed (TOD Deed) allows for the non-probate transfer of real property upon death. This seemingly simple law, Wisconsin Statute 705.15, can be used as a powerful estate planning tool, in the right circumstances. However, when not implemented correctly for the right purposes, this specific deed can create more problems than it solves.
For purposes of this article, we will not discuss the complications regarding the various issues of jointly owned property or property owned by more than one person. Joint property or property owned by more than one person have their own issues and concerns when using a TOD Deed that are too involved to explain in this article.
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What is a Transfer on Death Deed?
In Wisconsin, a Transfer on Death Deed allows an interest in real property that is solely owned, or owned by spouses as survivorship marital property, or owned by two or more persons as joint tenants, to transfer real estate to beneficiaries without probate. In short, under the right legal ownership circumstances, a TOD Deed can be used to name a beneficiary on Wisconsin real estate with the beneficiaries then receiving the property upon the death of the owner.
What Are the Advantages of a Transfer on Death Deed?
The TOD Deed can be a powerful instrument, when correctly used, to help avoid probate. By naming beneficiaries on Wisconsin real estate, the property owner can determine who will inherit the property, without probate, upon the owner’s death. The benefits of a TOD Deed are straightforward – avoiding probate on Wisconsin owned real property.
Will a Wisconsin Transfer on Death Deed Alone Avoid Probate?
A TOD Deed alone is normally not enough to avoid probate in Wisconsin. However, as part of a well thought out estate plan, a TOD Deed can be appropriate and more cost-effective at avoiding probate than a revocable trust plan. As part of our meetings with clients for estate planning matters, we are always looking for the best and most cost-effective estate planning solutions for our clients. Where a TOD Deed can reduce cost and complexity for a client, while allowing the client to avoid probate, the TOD Deed will be suggested as an appropriate means of avoiding a Wisconsin probate.
Why Not Use a Wisconsin Transfer on Death Deed to Avoid Probate?
There are a number of reasons why we don’t often suggest using a TOD Deed alone to avoid probate. A few of the reasons why we may not suggest its use are below:
- There are minors who would inherit the property. The ownership of Wisconsin real property by minors, not in trust, can create more court work and expense than a probate. Often in these cases, a revocable trust would be a better choice.
- There are multiple beneficiaries who will receive the real estate. This can cause an issue since the TOD Deed will make all of the beneficiaries’ owners, and each beneficiary will have to participate in the subsequent deeding or real estate sale. This can be a burden when trying to sell real estate. A revocable trust may be a more efficient way of handling a post death sale without probate.
- There are one or more beneficiaries who do not get along. Putting real estate in the names of beneficiaries who quarrel is a recipe for trouble. While the TOD Deed might avoid probate, bigger issues (caused by disagreements between beneficiaries) will normally result in greater costs and expenses than not avoiding probate. The more appropriate estate planning technique in this situation may be a revocable trust.
- There are disabled beneficiaries, or beneficiaries with creditor problems or potential divorces. In these circumstances, a TOD Deed may not be an appropriate estate planning technique in place of a revocable or irrevocable trust.
Where Does a Wisconsin Transfer on Death Deed Fit into an Estate Plan?
A TOD Deed should not be completed without a full understanding of a client’s family and financial situation. It is rarely appropriate without other estate planning documents, such as a Last Will and Testament , Durable Power of Attorney, and Power of Attorney for Health Care.
Even though the real estate may avoid probate through the use of a TOD Deed, it is important for a Last Will and Testament to confirm the desires and intent in case the TOD Deed is ever challenged or deemed ineffective.
It is also important that a TOD Deed be recorded prior to death to avoid potential title company complications. Finally, a Last Will and Testament can be important to confirm other desires and wishes, including personal property.
Is a Wisconsin Transfer on Death Deed Used with Revocable Trusts?
Yes, in the appropriate circumstances, our estate planning lawyers will use TOD Deeds to transfer property, non-probate, at death to a Wisconsin revocable trust or even a revocable trust created in another state. This is most often used for single Wisconsin residents where we do not want to retitle the property in the name of the trust, but want to avoid probate.
A Wisconsin Transfer on Death Deed Does Not Protect Assets from Nursing Homes
While a TOD Deed does name a beneficiary on real estate and can avoid probate on real estate, the owner is still the owner of the property until death. Therefore, a TOD deed does not protect assets from Title 19, Medicaid or other long-term care costs. Moreover, a TOD deed does not protect the property from other creditors.
We Can Help Decide If a TOD Deed is Right for You
We are well versed in reviewing clients’ needs and helping determine the best and most cost-effective solution for their estate planning needs. We have literally created and used hundreds of TOD Deeds for our clients.
When you work with Wokwicz Law Offices, LLC, our estate planning attorneys will review your financial and family situation and work with you to create an appropriate and cost-effective estate plan. We invite you to contact us today to discuss your plans.