Protecting Your Home: The Power of Transfer on Death Deeds in West Virginia

Your home is often your most significant asset, making it essential to safeguard it for the well-being of your loved ones after you're gone. While a will-based estate plan has many benefits, it will not fully shield your home from creditors or estate recovery.  Fortunately, for individuals with real property in West Virginia, there's a straightforward yet powerful solution available: the Transfer on Death Deed (TOD Deed).  This tool offers a streamlined and efficient way to ensure that your real property passes to your heirs seamlessly.

What is a Transfer on Death Deed?

A TOD Deed is a legal document used to transfer real estate upon the death of the property owner, directly to a designated beneficiary without the need for probate. This means that the property passes outside of the probate process, avoiding the time-consuming and often costly court proceedings typically associated with transferring property after death.

 Other Benefits of Transfer on Death Deeds:

1. Avoid Medicaid Estate Recovery: For clients concerned about Medicaid eligibility and the potential impact of Medicaid estate recovery, a TOD Deed can be a strategic tool.  Since the property passes directly to the beneficiary outside of probate, it may not be subject to Medicaid estate recovery, helping to preserve assets for heirs.

2. Not Considered a Gift: Unlike other property transfer methods like gifting or transferring a remainder interest in real property, executing a TOD Deed is not classified as a gift. This distinction is crucial, as it means that no actual ownership of the property changes hands when the TOD Deed is signed. Consequently, it does not trigger gift tax implications or affect Medicaid eligibility. Gifting typically results in a Medicaid eligibility penalty period, which the TOD Deed avoids.

3. Step-Up in Basis: Despite the property passing directly to the beneficiary, it still benefits from a step-up in basis for tax purposes. This adjustment means that the beneficiary's cost basis in the property is reset to its fair market value at the time of the owner's death. This adjustment could substantially lower capital gains taxes if the property is sold in the future.

4. Efficiency and Control: Unlike complex legal arrangements, TOD Deeds provide a simple and straightforward process that allows owners to specify beneficiaries and transfer their property with ease. Furthermore, with TOD Deeds, property owners can maintain full control over their assets during their lifetime.  Owners still have the ability to revoke the TOD Deed, change beneficiaries, or sell the property if they wish. With TOD Deeds, individuals can achieve their estate planning goals without sacrificing control over their assets, making it an attractive option for those seeking simplicity and efficiency in their estate planning endeavors.

If you would like more information on TOD Deeds and how it can be beneficial to your planning objectives, please set up a Peace of Mind Planning Session. https://calendly.com/warner-law/peace-of-mind-planning

*Estate planning rules change frequently and content in this article may no longer be up to date.  This article is for informational purposes only and is not legal advice.