September 10, 2014
Effective June 12, 2014, Washington state adopted new “Transfer on Death” (TOD) deed legislation. The new statutes will often affect Elder Law Practices.
The provisio9ns are now found at RCW Chapter 64.75, the Uniform Real Property Transfer on Death Act.
Previously, almost all real property transfers on death required a probate.
Statutory alternatives to probate do not apply to real property. However, it has been possible to prepare deeds in which the grantor passes property to a grantee/beneficiary, but retains a life estate, with the life estate to terminate on death of the grantor.
The new TOD statutes provide an alternative to probate. However, it will be important for each attorney to decide how this type of deed “fits into” larger client planning for best results.
There are some key features of the new ACT that need to be noted.
In order for the transfer of property to achieve its intent on death, the designated beneficiaries must survive the grantor; the property interest lapses for any beneficiary who predeceases the grantor.
Transfer by a Will is required in order to name contingent beneficiaries in case any beneficiary predeceases the grantor.
Transfer of property to a Trust may also raise issues without a Will and probate.
If there are multiple beneficiaries, concurrent interests are transferred in equal and undivided shares.
A beneficiary takes the property subject to all existing encumbrances.
And, importantly, the state Medicaid program can file a lien against the property for long-term care services received for 24 months after the grantor’s date of death.
The impact of preparation of such a deed on Medicaid gifting rules is yet to be determined.
If a TOD deed is prepared along with a backup Will, it seems that the provisions of the deed will override any conflicting provisions of the Will.
Conflict may result between these documents on the death of the grantor/testator, particularly with respect to contingent beneficiaries and any restrictions placed on transfer of the property in the Will.
In such circumstances, it is not yet clear how the dispute-resolution statutes under the Trust and Estate Dispute Resolution Act (TEDRA) will apply to new Chapter 64.75.
More on Elder Law in Washington may be found in the “Elder Law” volumes of Washington Practice by Cheryl and Ferd Mitchell: Washington Elder Law and Practice (Vol. 26), the associated Elder Law Handbook (Vol. 26A), and the Washington Probate volume (Vol. 26B). These materials are available at www.legalsolutions.thomsonreuters.com under the tag Mitchell and Mitchell elder law. Additional updates may also be found on this blog under the tag Washington Elder Law Practice Reports.