(First of two parts)
On June 12, Washington joined more than 20 other states and the District of Columbia in authorizing transfer on death deeds ("TOD Deed").1 The bulk of the new law is now codified as new RCW Chapter 64.80 and may be cited as the Washington Uniform Real Property Transfer On Death Act,2 although it also includes changes to various provisions in RCW Titles 11, 82 and 84.
A TOD Deed offers a non-probate method of transferring an interest in Washington real property to one or more beneficiaries at the death of the property owner or owners. To be valid, a TOD Deed must satisfy all the requirements of an inter vivos deed and must be recorded during the life of the owner in the county where the property to be transferred is located.3
A TOD Deed does not transfer any interest in the property until the owner's death and is fully revocable during the owner's lifetime as long as the owner has testamentary capacity.4 To take under the TOD Deed, a designated beneficiary must survive the transferor5 and, to perfect title after the transferor's death, record a certified copy of the owner's death certificate in the county where the property is located.6
Although the new TOD Deed form offers many benefits over other, often-used probate avoidance techniques for transferring real property, it also presents many potential traps for both laypersons and practitioners. Thus, it is vitally important that practitioners know the basics of TOD Deeds, their uses and limitations, and avoid inadvertent failures and unintended consequences from the use of TOD Deeds in conjunction with uncoordinated planning.
The Washington act comes with its own terminology.7 A "transferor" of a TOD Deed is an individual who makes a transfer on death deed, and a "designated beneficiary" means a person designated to receive property in the TOD Deed.8 The designated beneficiary might not actually take under the TOD Deed; thus, a "beneficiary" is a person or entity that actually receives property under the TOD Deed.9
For example, although Jim and Sally Smith may both be listed as designated beneficiaries on a TOD Deed, if Jim predeceases the transferor, the gift to Jim lapses and only Sally receives the property on the transferor's death. In that case, only Sally is a beneficiary. In addition to natural persons, corporations, trusts, estates, partnerships, limited liability companies, the government or a governmental subdivision, agency or instrumentality, any other legal or commercial entity may be a beneficiary of a TOD Deed.10
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