Testators drafting wills and other documents often prioritize providing support for specific loved ones and naming beneficiaries for their most valuable assets. Wills and trusts are common instruments used by those thinking about the descent of their property.
There are also specific documents that people can draft for certain resources. A transfer-on-death instrument is one of the possible solutions that a testator could utilize if their estate contains the home where they live or other real property.
Why use a transfer-on-death instrument instead of a will?
To bypass probate
Testators may execute transfer on death instruments because they don’t want their homes to pass through probate court. They may worry about delays in taking possession of the property or outside claims against the home.
They may also be near the threshold for estate taxes or hoping to minimize the tax rate that applies. Transfer on death instruments allow for the property to transfer to new ownership without probate court involvement.
To retain control
Transferring a property to a trust or taking on a co-owner while still alive are both options for keeping a house out of probate. However, those options may limit an individual’s control over the property.
The owner may need to communicate with the trustee or with a co-owner before making choices, such as the decision to refinance a mortgage or open a home equity line of credit. Transfer-on-death instruments allow homeowners to designate a specific beneficiary without giving up control while they are still alive.
Making use of the right estate planning tools can help people leave meaningful legacies and limit the complications that arise after their passing. Creating specific plans for highly valuable assets, including real property, can give people peace of mind.