Saved by Death
As of this month, Utah has joined the ranks of many states in the passing of its own "Transfer on Death (TOD) Deed" statute. UCA 75-6-4. Basically, the owner of a piece of real estate executes a deed transferring ownership of the property upon his or her death. If done properly, when the owner dies, the property becomes that of the beneficiary and does NOT have to be probated. Since real estate typically would otherwise have to go through probate court to be transferred from the decedent to the beneficiary, the new law should potentially save time and money.
Missouri was the first state to enact a TOD law, doing so in 1989. So far it has worked well with few reported problems. How does it work in Utah?
First, the transferor needs to die after May 8 of this year. (If you died before May 8, you can't utilize this law, sorry. But please let me know you're reading this blog because that is quite a story!)
Second, the transferor needs to record the deed while s/he is alive. The deed may name one or more beneficiaries but not a class. The deed must also follow the same formalities of any other proper inter vivos deed and state that the transfer to the beneficiary is to occur at the transferor's death.
Third, a cautious note. Revoking a recorded TOD deed is not done easily. Certain elements must be met. Additionally, if the subject property is jointly owned, revocation by one owner does not equal revocation by the other. Both owners would have to revoke for the deed to be fully revoked. And, note this language of the law: "After a transfer on death deed is recorded, it may not be revoked by a revocatory act on the deed." UCA 75-6-411.
Property subject to a TOD deed can still be transferred inter vivos by the owner after the TOD deed's recording. However, my reading of the statute is that the new owner takes the property subject to the TOD unless the transferor specifically revoked the TOD. This could cause some real headaches if the interested parties are unaware of one another.
There is much more to the law than what I have covered here. In summary, it is fair to say that the TOD deed may serve a very useful purpose as an estate planning tool. It could certainly save the estate the time and money of probate court. Nevertheless, I urge a high degree of caution before running down to the recorder's office with your TOD deed! Talk to an attorney or a property expert first.