Transfer on Dead Deed (TODDs)

 

 

 

 

 

 

 

 

 

 

Perspectives of Transfer on Death Deeds (TODDs)

You have considered adding a Transfer on Death Deed (known as “TODD”) into your estate plan. What other consideration must be made to fully understand the purpose and utilization of this transfer vehicle? We will cover the relationships that a TODD will have with your estate plan and the beneficiaries down the road upon the Grantor Owner’s death.

 

Factors to Consider When Executing TODDs

If the real property being transferred by a TODD is held by joint tenants, then all of the joint tenants should execute the TODD, or in short, the surviving joint tenant should execute the deed. This explains the significance of knowing the proper title holding of your real property, whether it is held in joint tenancy or as tenants in common. Under the Minnesota Statute governing the TODD vehicle (Minnesota Statutes § 507.071), there are informative guidelines regarding the situation of having your designated “attorney-in-fact” execute a TODD on your behalf. If a TODD is executed by a Grantor’s attorney-in-fact as designated within a Power of Attorney, an estate planning tool to plan for incapacity, the TODD must include authorization for the attorney-in-fact to execute deeds and also, if applicable, the authorization to “make gifts” to him/ herself, as directed under a Power of Attorney.

Recording TODDs

Firstly, a TODD transfer of real property is effective only if it is recorded prior to the death of the last surviving Grantor Owner and recorded in the County where the real property is located. In addition, TODDs and Medical Assistance It is important to remember that the Minnesota Statute governing TODDs is not a Medical Assistance avoidance tool. In order to effectuate a TODD, one must file certain documentation in connection with Medical Assistance, including:

  • an Affidavit of Identity and Survivorship for Transfer on Death Deed
  • a certificate of death
  • and a certificate of clearance from the Minnesota Department of Human Services.

These documents are necessary to prove that no claims for Medical Assistance exist, which may be tied to the grantor owner’s interest in the real property. Most importantly, a TODD has absolutely no effect on determining a person’s eligibility for Medical Assistance.

Using TODDs with Trusts

A TODD deed may transfer an interest in real property to the trustee of a living trust. For instance, a revocable trust, a testamentary trust created under a Will, or any other entity legally qualified to hold title to real property under Minnesota law.

Enforcement of TODDs

Any matter raised in connection with enforcement of a TODD deed shall be determined in the probate court division. However, if you are concerned with creditor issues, creditors cannot attach to a Grantee Beneficiary’s interest in the real property until after the Grantor Owner dies.

Above all, if you wish to discuss your questions concerning the Transfer on Death Deed (TODD) or wish to speak to an attorney about your estate planning needs, please contact Tina M. Johnson, RP® of Kennedy Law Office: 651-262-2080 or clerk@mpkennedylaw.com

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Exploring the Estate Planning Vehicle – Transfer on Death Deeds (TODD)

Kennedy Law - TODD Estate Planning

Transfer on Death Deed

The Transfer on Death Deed (known as “TODD”) became available in 2008 to be used as an estate planning tool for those individuals owning Minnesota real property and are governed under Minnesota Statutes § 507.071. The TODD evolution stemmed from the concept of “payable on death” or “transfer on death” transactions that involve survivorship rights when someone passes away. Oftentimes, the TODD is utilized to avoid probate and to simplify estate planning because the only way to transfer or sell a decedent’s real estate, if no other planning is completed, is through a probate proceeding.

Multiple states have incorporated the TODD, or a similar transfer vehicle, into their legal systems. A TODD can be a very useful tool to avoid probate; however, this may not be a good option for all people. There are valuable nuances to be aware of when incorporating a TODD into your estate plan, which we would like to expand on. Planning to fuel this vehicle may cause problems down the road, which may not be what the Testator/ Grantor intended when crafting their estate plan. Therefore, the importance of legal guidance when preparing an estate plan that includes a TODD is key.

A TODD allows the owner of real property to execute a deed that designates a beneficiary who will take ownership of said real estate at the owner’s death (or the surviving owner’s death, if the real property is held in joint tenancy). The TODD is also subject to a 120-hour survivorship requirement under Minn. Stat. § 524.2-702, a similar requirement under estate planning and probate administrations.

Beneficiaries of TODD Deeds

A TODD may designate multiple grantee beneficiaries to take title as joint tenants, as tenants in common, or in any other form of ownership or tenancy that is valid under Minnesota law. The common default is tenants in common, which means this…if you do not specify and include on the deed that you want the beneficiaries to take tile as “joint tenants,” then the beneficiaries will take title as tenants in common.

A TODD also allows you to include designations of one or more successor grantee beneficiaries, or a class of successor grantee beneficiaries, or both. If the transfer on death deed designates successor grantee beneficiaries, or a class of successor grantee beneficiaries, the deed shall state the condition under which the interest of the successor grantee beneficiaries would vest (joint tenancy or tenants in common). For example:

Jane Doe, an unmarried person (“Grantor Owner”), hereby conveys and quitclaims to
Johnny Johnson, a single person (“Grantee Beneficiary”), effective on the death of the
Grantor Owner, real property in Dakota County, Minnesota, legally described as follows:

[INSERT LEGAL]
If Johnny Johnson fails to survive me and leaves no living issue, I, Jane Doe, an
unmarried person, Grantor Owner, hereby conveys and quitclaims the above
described real estate to my son, Jack Doe, if he survives me, and to my daughter,
Jill Doe, if she survives me, as joint tenants (“Grantee Beneficiaries”), effective
on the death of the Grantor Owner, Jane Doe.

Overall, it is important to be detailed and accurate when preparing, executing, and recording a TODD in order to avoid having to proceed with a probate administration to effectuate the transfer upon the Grantor Owner’s death. This detail may include having the correct legal descriptions and title holdings for the real property when preparing the TODD, to receiving legal advice and guidance on this tool and its purpose from an attorney, as well as understanding the Grantor’s clear intent for including a TODD in his/her estate plan.

Are you ready to “fuel the TODD vehicle?

If you wish to discuss your questions concerning the Transfer on Death Deed (TODD) or wish to speak to an attorney about your estate planning needs, please contact Tina M. Johnson, RP® of Kennedy Law Office: 651-262-2080 or clerk@mpkennedylaw.com

 

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Why Trusts are Beneficial in Estate Planning

Why is Estate planning so important anyway?

 

Trusts and Titling

      • Living Trusts are valuable tools in estate plans, and it is key to transfer the title of assets into the trust to ensure the benefits of the trust are attained.
      • An estate plan that includes a trust also includes a pourover will. A pourover will essentially pours the probate assets (those assets held individually, without a beneficiary designation) directly into a trust upon death.
      • It is important to note that assets held jointly with another individual or that include a transfer on death or beneficiary designation are important tools in an estate plan as a means of directly transferring assets to such individuals named on title or on beneficiary designations at your passing.

Trusts Can Help to Protect Beneficiaries

      • Protect minor children’s inheritances by ensuring they do not receive a large inheritance at age 21, as would be the case if funds passed to a minor under the Uniform Transfers to Minors Act (UTMA) which holds the assets in an UTMA account until the minor reaches age 18 or 21, depending on how the assets are given to the minor.
      • Include a “spendthrift clause” to protect assets in a trust form passing into the hands of a beneficiary’s creditors. A “spendthrift clause” contained in a trust states that the money and other property held in a trust is to be held for the benefit of the beneficiaries and not their creditors. If worded properly, at least in most states, this clause will protect the beneficiaries so that their creditors do not receive the money before they do.

More on selecting the right Trustee

Trusts Can Provide for Different Beneficiaries

      • Situations involving a second marriage with children form a prior marriage may utilize a living trust by providing income and principal to the spouse during life, with a remainder to the children. This ensures that the spouse is taken care of during his or her lifetime, and the children ultimately receive the property.
      • Benefit a spouse and a charity by using a split interest trust, such as a charitable remainder trust or a charitable lead trust.
        If there are minor children who need more property for their education or other needs, a trustee may have the discretion to distribute to the beneficiaries in varying amounts, as needed.

Trusts Can Protect Property…Consider “Special” Assets

      • You work hard for your money and you don’t want it wasted. A trust may mandate professional investment management or require a corporate trustee.
      • How to deal with a family cabin? Keep it in the family and help resolve family conflicts by transferring the cabin to a trust and identifying a trustee who will access costs, scheduling use of the cabin, etc.

Trusts Can Provide a Lifetime Gifting Vehicle

      • Most estate planning for large estates involves gifting to children, spouses of children or grandchildren.
      • Trusts for minor beneficiaries are preferable to conservatorships because of age limitations.
      • Trusts for minor beneficiaries may be more flexible than Section 529 plan gifts.

Trusts Can Provide Insurance Planning

      • Life Insurance owned by a person is included in his or her estate at death. Large insurance policies can significantly increase a person’s taxable estate. Consider an Irrevocable Life Insurance Trust to help plan for tax savings.

Trusts Can Exercise Control over the Beneficiaries

      • Trusts can provide or withhold benefits under certain circumstances, such as addiction.
      • Mandate professional investment.
      • May limit benefits to earned income from employment.
      • May require second opinions on spending decisions for a spendthrift child.

Trusts Can Plan for Disability Funding

      • Name a co-trustee. This may prevent the need for a guardianship or conservatorship down the road.
      • Special Needs Trusts can be used for limited protection of your own assets and to enhance the quality of life while sill qualifying for certain governmental benefits, such as medical assistance.

Re-Titling Assets Into the Trust – Funding the Trust

      • The most important key to using a trust is funding a trust. If this is never completed… assets are not transferred to the trust…then you essentially have “an empty gas tank” or “an empty purse.”

 

If you wish to speak to an attorney about estate planning, please contact Tina M. Johnson, RP® of Kennedy Law Office: 651-262-2080 or clerk@mpkennedylaw.com

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How to Properly Select a Trustee or Personal Representative

Personal Representative and Trustee Selection - Kennedy Law Offices of Eagan MN

Choosing a Personal Representative or Trustee

With all the decisions you need to make when putting together an estate plan, choosing a personal representative or a trustee is one vital piece of the planning process. The person or entity you select can help carry out your wishes and help to keep your family’s life protected after your passing. However, making the wrong choice can harm even the most carefully designed estate plan. This article provides an overview of traits of an effective personal representative and trustee and the distinctive benefits of selecting either an individual or a corporate entity for these roles.

The purpose of a personal representative is to maintain and administer a decedent’s estate administration and to distribute the estate to the beneficiaries pursuant to a decedent’s Will or under Minnesota’s intestacy statutes. When a trust is included within the estate plan, it may be to provide for a beneficiary who lacks either the desire or the ability to manage money or finances. The trustee selected is often called upon to decide whether to distribute trust assets for any particular purpose. Many trusts allow the trustee to distribute the funds for a beneficiary’s health, education, or support. The trustee must exercise effective independent judgement in applying these standards while communicating the decisions effectively to the beneficiaries. A personal representative and/or trustee must have good judgment, excellent communication skills, and the ability to be fair and just to all beneficiaries of an estate or trust. A trustee is also responsible for investing trust assets, while a personal representative must preserve estate assets for distribution to the beneficiaries. When determining the proper investments, a trustee must look at both the needs of the current income beneficiaries and the remainder beneficiaries. Thus, a trustee should have investment expertise, integrity, financial stability, knowledge of the donor’s goals and the ability to balance competing interests.

Selecting an Individual Personal Representative or Trustee

People often choose a family member or a friend to be the personal representative or trustee because of that person’s relationship to the family or to the beneficiaries. This family member or friend may have personal knowledge of the family’s situation and is often familiar with the goals and objectives of an estate plan and trust. An individual trustee may also have first-hand knowledge of certain types of assets held in the trust, such as a family-owned business or a farm.

Thus, an individual trustee’s input into the operations of such businesses can be important to the future success of the entity. Of course, there are downsides to naming an individual personal representative or trustee. These chosen individuals are not professionals and often are not familiar with the duties of holding a “fiduciary” title. For instance, individual trustees may have difficulty understanding the difference between managing and investing their own funds and managing and investing trust funds collectively. Also, an individual personal representative and trustee may overlook the record-keeping function and fail to maintain adequate accounting records and tax return filings.

Selecting a Corporate or Professional Personal Representative or Trustee

Certain banks, trust companies, and/or law firms may serve as a personal representative or trustee. These professional/corporate entities are well-positioned to handle the estate and trust administration functions, such as accounting services, record keeping, investment and management of assets and tax return preparation. Corporate trustees are subject to federal and state regulation and are expected to monitor the estate and trust assets and investments closely. Additionally, a corporate trustee is “permanent”and will not predecease the beneficiaries of a trust. Kennedy Law offers these professional/ corporate services for estates and for trusts.

Questions to Consider in Choosing a Personal Representative or Trustee

Overall, your choice of personal representative and trustee depends hugely upon your individual goals and the needs of your beneficiaries. Here are several questions to consider when putting together your estate plan:

How will your selection relate to your beneficiaries?
What level of expertise is needed in investment and management of assets held in the estate or trust?
What are my long-term goals?

If you wish to discuss your questions concerning the selection of a personal representative or trustee or wish to speak to an attorney about your estate planning needs, please contact Tina M. Johnson, RP® of Kennedy Law Office: 651-262-2080 or clerk@mpkennedylaw.com

 

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A small estate exists when there are probate assets that do not exceed $75,000. Whether or not something is a probate asset can be difficult to answer and it is advised that a probate attorney make the determination to ensure the assets are handled correctly.

Once the small estate affidavit has been completed, the assets can be transferred without formally appointing a personal representative through the court. There is also no need to provide notice to interested persons such as children, creditors, or a spouse.

The correct form to use to transfer assets in a small estate is an Affidavit for Collection of Personal Property. The form is also sometimes called the Small Estate Affidavit. The process is governed by Minn. Stat. §524.3-1201. The form should only be filled out by a blood relative of the decedent or an individual who has a legal interest in the decedent’s property.

If you do not know if you have a legal interest in the property you should contact a probate attorney. Some examples of having a legal interest are:

  • A person named as the recipient of the property in the Decedent’s will;
  • The spouse of the Decedent;
  • A parent of the Decedent and there are no living children nor a living spouse;
  • A brother or sister of the Decedent and there is no closer relative.

There are instances when the value of the assets might not exceed $75,000 but the Affidavit of Collection of Personal Property form cannot be used. For example, the affidavit cannot be used to transfer real property. Real property has to be transferred through the probate court.

For questions on the small estate affidavit, contact Kennedy Law Offices, P.A. at phone number: 651-262-2080 or email: clerk@mpkennedylaw.com

A carefully crafted estate plan allows you to decide you will receive your assets at your passing. It is important to consult with an estate planning attorney to ensure the documents are properly executed. A common misconception is that if someone has a will, their family won’t need to go through the probate court. Consult with Kennedy Law to create an estate plan specific to your assets, property, and family. 

1. Decide Who Receives Your Assets
Assets that you own in your individual name at the time of your death are subject to probate. Probate can be a time-consuming, complex, and expensive process. Having an estate plan can minimize the expenses and uncertainties of probate by having clear instructions on how your assets should be distributed. Having an estate plan also helps to minimize potential disputes between family members.

2. Name Guardians to Care for Minor Children
If you die without a surviving spouse to care for your minor children (i.e., under age 18) then a guardian and/or conservator will need to be appointed by the probate court to care for your minor children. You can indicate in your estate plan whom you would trust to be the guardian and/or conservator of your minor children.

3. Name the Personal Representative of your Estate
In most instances, if you die with real property and/or assets worth greater than $75,000.00 in your individual name, these assets must be administered under the direction of the probate court before they can go to your beneficiaries. By executing a will, you can specify who you trust to serve as the personal representative of your estate. The personal representative is responsible for paying any debts and expenses, deciding how specific items with be allocated among your beneficiaries, liquidating your assets, and more.

4. Protect your Family’s Inheritance from Creditors and Estate Taxes
An experienced estate planning attorney can help minimize the risks of your assets being subject to creditors and/or more estate taxes than what is legally necessary. If you have potential creditor problems or work in an industry that is subject to litigation, there are several ways to isolate your assets from future creditors. An experienced estate planning attorney can help you navigate these complex questions and help protect your family from uncertainties and unnecessary disputes.

To learn more about estate planning, please call 651-262-2080. 

Estate plans are not just for the wealthy. Having an estate plan is important to ensure that your assets are distributed to your loved ones without confusion or dispute. Estate planning allows you to decide who will receive your assets. There are different ways to create estate plans: through a validly executed will, a revocable trust, owning your assets jointly, or filing a transfer on death (TOD) deed or beneficiary designation form. Each of these options have advantages and disadvantages, so it is important to go through this process with an experienced estate planning attorney.  

To learn more, please feel free to view our estate planning intake form or call us at 651-262-2080 to have any of your questions answered and/or schedule a time to speak with one of our attorneys.