Monthly Archives: September 2014

The Newest Estate Planning Tool for Washington Attorneys: The Transfer on Death Deed

On June 12, 2014, Washington joined a growing number of states which now allow residents to transfer title to real estate by means of a “transfer on death” deed.  This deed allows the owner of a piece of real estate to execute and record a deed which will transfer title to the named beneficiary upon the owner’s death without having to transfer title after the owner’s death as part of a probate of the owner’s estate, much in the same way an owner of a bank account or brokerage account can execute a document naming a person or persons to be a beneficiary of the account so that title passes to the designated beneficiary upon death, making it unnecessary to probate such an account.

Like any such change in the law, this presents a number of new opportunities, and new potential pitfalls for the unaware and those who are unsophisticated about estate planning.   Nevertheless, for those with truly modest estates that do not meet Washington State or Federal Estate Tax thresholds, the new law is a tool that could help such property owners avoid a probate if they so desired, and I suspect that careful and considered use of these deeds might indeed reduce the number of probates that we as practitioners currently conduct essentially only for the purpose of transferring the title to the real estate of the deceased.  These deeds could also provide an additional means to make gifts from an estate as part of an integrated estate plan, but I cannot caution an owner of real estate enough about the need to consult with an attorney before making such a transfer, because doing so would reduce the number of assets available to pay estate taxes, which could become especially problematic in large taxable estates where other resources may also be turned into non-probate assets by means of payable on death beneficiary designations.

Using these deeds without proper planning and understanding of consequences may also create unintended consequences for those who are married or who are registered domestic partners due to the operation of community property law.  However, this may permit people to make gifts while they are alive, without triggering the need to file an informational federal gift tax return.

Another issue is the fact that there are potential situations that could involve this law in which the outcome is not necessarily clear.  One commenter has already observed that there is apparently no limitation on time in which DSHS could place a lien against the deeded property for services rendered to the deceased, and in the absence of a clear limitation on the time in which to do so in the statute, it would appear that DSHS will then have up to twenty-four months from the date of death to place a lien, which would lead the careful lawyer to advise the owner wishing to use this method of transfer that the beneficiary should not consider the gift to be “free and clear” until this two year window had passed.

I am excited that we have another option available in our estate planning tool kit.  I also see the potential for people to really screw up their estates if they don’t get help in reviewing the plan beforehand.  It will also change how we do probates, as we will have to clearly understand whether or not the real estate is a non-probate asset, or an asset of the estate.

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Filed under Planning, Probates and Estates, Real Estate, Transfer on Death Deeds

Organ Donations As Part of Estate Planning

For many years now, I have been asking estate planning clients if they would like to be organ donors.  The intent of the question is to find out if they would like to be general organ donors, donating whatever organs can be used for transplant at the time of their death.  When clients answer this question affirmatively, we will give them some instructions for getting in contact with the organ donor registry if they haven’t already marked their driver’s licenses as being organ donors.

However, a short time ago, we had a client ask us a question we had never been asked before:  “Can I make a specific bequest of an organ in my Will?”

It wasn’t a question that I could answer right away.  Because of the sensitive nature of organ donations, and the public interest in not wanting to foster a business in organ harvesting, I guessed that if it was permitted, there would likely be a whole host of rules to be followed as part of the process, and I was right.

However, as it turns out, the answer is “Maybe, under certain circumstances.”

The Washington Revised Uniform Anatomical Gift Act, RCW 68.64 sets forth the procedures for making anatomical gifts, including specific bequests of organs.  The statute does permit a donor to make a specific bequest of a specific organ to a specific person, provided that the rules set forth for doing so are followed, but if the named recipient is unable to make use of the organ, it will pass to the next appropriate organ or tissue bank, or organ procurement organization.

Because there are a number of formalities to be observed and steps to be taken in order to correctly make a specific bequest of an organ, and additional steps to be taken if the donor’s driver’s license or state issued identification card already denotes the donor as an organ donor, I cannot recommend enough meeting with an attorney to help make sure that the gift the donor wishes to make will be directed to the appointed person.  This is especially important as the statute exempts parties and organizations from liability for action taken in good faith attempts to comply with the statute.  This means if a donor registry is unaware of a specific bequest made in a donor’s Will, and it gives the donated organ to a person other than the named beneficiary, it is unlikely that it can be held liable, absent gross negligence or some other factor that would counter a good faith claim.

Now that I know the answer to this question, I’m looking forward to another client asking about this option in estate planning.

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Filed under Pieces of the puzzle, Planning, Probates and Estates, Uncategorized