As a homeowner, you undoubtedly work hard to take good care of your property. This includes things like regular maintenance and repairs. But an often overlooked part of being a responsible homeowner is planning for the future of your property after your death. This includes estate planning.
Fortunately, unlike home maintenance and repairs, planning for the future of your home after your death can often be accomplished in a one-and-done fashion. One legal instrument available to Colorado property owners is the transfer on death (TOD) deed. As its name suggests, the TOD deed is a tool that lets someone designate one or more beneficiaries—often a relative or close friend—to obtain the title to their property immediately upon their death.
Importantly, the TOD deed allows the future owner to skip the probate process entirely. In addition, the passing of title to the new homeowner is not considered a gift, meaning that the gift tax should not apply to the transaction.
The convenience of skipping probate along with potential tax savings and the overall simplicity of this legal instrument can make it an extremely beneficial tool for both a homeowner and her loved ones.
Transfer on death deeds are filed in local land records offices. They are fully revocable once filed, meaning that they can be canceled at any time, for any reason. The eventual beneficiaries do not have any rights to the property before the death of the homeowner, which minimizes the risk of creating a TOD deed. In the meantime, the homeowner will still be responsible for mortgage payments, property tax, and regular maintenance and repairs. The homeowner will also remain free to sell, refinance, rent, or re-mortgage the property at any time during her life. Any debts associated with the property will transfer to the beneficiary upon the homeowner’s death.
A transfer on death deed saves family members and other loved ones the hassle and costs of the probate process while sparing them of the gift tax. For these reasons, on its face, it may seem like the right decision for any Colorado homeowner.
There are, however, some important drawbacks to the TOD deed, such as whether inheritance taxes apply, which could mean that another instrument would better minimize the tax burden on the beneficiary. An estate planning firm can help you determine if a transfer on death deed is the right choice for your specific situation.
Consult a Colorado Estate Planning Attorney Today
If you are a property owner in Colorado, do not hesitate to contact an estate planning attorney to determine if a TOD deed is the right choice for your estate. The attorneys at the Braverman Law Group are some of the nation’s leading estate-planning lawyers. Together, they have provided tailored assistance to clients with a wide variety of estates, from those with a single property serving as their home to those who own multiple properties around the country. To learn more about Colorado transfer on death deeds, and to schedule a free consultation with us, call (303) 800-1588 today.