Transfer on Death Deeds

The Nebraska Uniform Real Property Transfer on Death Act, Neb. Rev. Stat. ยง 76-3401 et seq., became effective as of January 1, 2013, joining 18 other states and the District of Columbia having similar statutory provisions. The purpose of the Act is to streamline the transfer of real property upon an owner's death by allowing the owner to execute transfer on death (TOD) deeds as part of such owner's estate planning, thereby passing ownership of real property immediately and automatically at death. This type of deed allows the owner's real property to pass to one or more beneficiaries upon the owner's death without having to be probated, as would be the case if the property was transferred to the beneficiaries by a will or other testamentary document. In many respects, a TOD deed is substantially similar to a regular deed used to transfer real estate, with the primary difference being that of timing as the transfer from the owner (also known as the grantor) does not take effect (pass to the designated beneficiaries listed on the TOD deed) until the time of the grantor's death.

Perhaps the biggest benefit to a TOD deed is the flexibility it affords. If an owner uses a direct deed to transfer an interest in property to a beneficiary, the beneficiary is given a present ownership interest in the property (for example, complete ownership or joint tenancy), which cannot be altered or revoked if the initial owner changes their mind. Because a TOD deed creates a future interest in the property (which becomes an actual interest upon the death of the owner), it can be altered or revoked at any time before the owner's death. This allows the owner to retain full ownership and control over the property during their lifetime and to designate who shall own the property upon their passing.

The Act sets forth the required elements and procedures for a valid TOD deed. As with a regular deed, for a TOD deed to be properly recordable, it must be signed by the grantor, acknowledged (verified by a Notary Public), and recorded in the county where the real property is located. The TOD deed must also state that the transfer to the designated beneficiaries is to occur at the time of the grantor's death and it must contain the warnings enumerated in the Act. These warnings notify interested parties that the real property being transferred under the deed may be subject to Nebraska's inheritance tax and to claims of Medicaid reimbursement or assistance. Furthermore, a TOD deed must be recorded within thirty days of its execution and prior to the death of the grantor.

Note that the beneficiaries will take the real property subject to any mortgage or debt attached to the real property. The use of a TOD deed simplifies the inheritance of real property, by allowing the beneficiaries to bypass probate. Following death, the beneficiaries will need to record an affidavit and a copy of the grantor's death certificate with the appropriate county's register of deeds.

If you have questions about the proper use of TOD deeds under the Nebraska Uniform Real Property Transfer on Death Act or are interested in taking action in accordance with the Act, your Woods Aitken Real Estate attorney can offer valuable insight on the issues involved, including drafting a TOD deed.

We encourage you to subscribe to our E-Briefs to get the latest news, tips, and updates.