Transfer on Death Deeds are a Simple and Easy Solution
Summary - Living (and Dying) in a COVID-19 World:
If you have a pulse and a smartphone, then you, like everyone else, are probably being bombarded by stats and figures about the crisis we're all facing globally from COVID-19. It's pretty much impossible to escape; and even if you do turn off the phone or the TV, you're reminded of the crisis just by looking out the window and seeing your neighbors walk by wearing hospital masks. But, maybe confronting mortality on the daily can actually be a good thing. After all, death is the great equalizer and eventually we all face it. As Benjamin Franklin once said, "death takes no bribes." With that in mind, the purpose of this article today is to offer some practical estate planning advice for this crazy time in which we live. Planning can sound daunting and expensive, but in this article we're going to focus primarily on Transfer on Death Deeds and Wills. These are very simple and inexpensive options to make sure you have a plan in place that can help you be at ease.
But First, Some Zen (skip ahead if you’re good on Zen):
Death is only the end if you assume the story is about you.
-Welcome to Night Vale.
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Death is our friend precisely because it brings us into absolute and passionate presence with all that is here, that is natural, that is love.
-Rainer Maria Rilke.
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I shall not die of a cold. I shall die of having lived.
-Willa Cather.
Death can be scary. In the East, however, many cultures often take a Zen approach to death and spend time contemplating it so as to accept the temporariness of life without fear. The Bhutanese people, for instance, say that happy is the man (or woman) who contemplates their own death at least five times a day. (See also 2007 study in the journal of Psychological Science confirming that thinking of death may lead to acceptance which may make for a more peaceful here and now - https://journals.sagepub.com/doi/abs/10.1111/j.1467-9280.2007.02013.x). With that in mind, these quotes (courtesy of wecroak.com), remind us that it is important to cherish the time we have now and to think of those we leave behind. Also, we need not fear death; instead, we should fear not living each moment as best we can.
The Why's of Planning:
Probate Avoidance:
Many people die every day without having done any estate planning. That is okay. Their assets will eventually get distributed to their heirs through the use of the court system - called Probate. Probate however can be time consuming and expensive. It requires court involvement, and often an attorney is needed to help the process along - all of this takes time and money.
Tax Avoidance:
Often persons want to do estate planning because they are worried that their estate, upon death, will be subject to extremely high death taxes (40% + in many cases). For the average individual however, this may not need to actually be a worry because most normal-sized estates (under $11.5m) are not subject to any death taxes.
Peace of Mind:
One of the primary reasons to do some type of planning now is to be able to rest easy knowing you have a plan and that your assets will get where they need to go in the quickest and easiest way possible for your heirs.
Planning Options:
Transfer on Death ("TOD") Deeds:
The Basics: TOD Deeds are an amazing vehicle for persons to use to plan for their estates. With a TOD Deed, the client can designate now who will receive their real estate property upon their death. It is essentially a "payable on death" deed. This is especially useful as a planning tool because most of us have normal-sized estates where the main asset we have of value is our home.
Typical Cost: between $250 and $500.
Turnaround Time: 1 to 4 weeks.
Pros - Revocability: TOD Deeds are freely revocable, meaning that the client can create the deed (and designate a beneficiary), but then the client can revoke the deed freely at any time prior to their death or incapacity. The client can sell the property if they want, they can deed it away, or they can create a new TOD Deed with a new beneficiary.
Cons - Real Property Only & Less Flexibility: TOD Deeds only apply to your real property. It does not affect personal assets like furniture, vehicles, bank accounts, etc. A will (see below), however, can be used to address these assets. Also, because the process is so simple, less planning options are available than may be implemented via using a trust.
Will, or Joint Wills:
Using a Will and a TOD Deed together is a great way to be cost-effective in your estate planning.
The Basics: A will is a document created while you are living that designates to whom your assets (real property and personal property) will transfer to upon your death. Wills typically include your burial instructions, instructions on how outstanding debts are to be paid, and instructions as to who will be in charge of your estate (your assets) until the property is distributed to your heirs after your death.
Typical Cost: between $500 and $1,000.
Turnaround Time: 1 to 4 weeks.
Cons - Probate: If a will is in place, it still will require court authority to carry out its terms after the client's death. This will take time and money, but the process is typically cheaper and easier (~$2,500) if there is a properly drafted will.
Trust: Trusts are a great vehicle for estate planning but they are beyond the scope of this article. Suffice it to say that trusts are extremely useful and can definitely accomplish a client's goals, but they may not be as useful as the above options except for persons with very large estates (over 11.5m in assets), blended families, or other intricacies that require more complex planning.
COVID-19 Logistics - E-Meeting and E-Signing:
Logistically, accomplishing any of the above in this COVID-19 quarantine time may seem daunting. But fear not! It is doable.
Meeting with an Attorney: Attorneys are learning how to work remotely. Luckily for me, I have been a remote-working attorney for several years now, so I am a pro at quarantine life ;). You can now meet with an attorney via FaceTime, Google, Skype, Instagram Video, etc. This should not be an impediment and in fact it can save you travel time, etc.
Signing the Documents: Again, in this remote work environment, we are all having to improvise. Docusign is our friend, allowing for e-signatures in an easy and seamless process. Also, the above planning documents require a notary, but Governor Ige signed Executive Order 20-02 which allows notaries to perform their duties via audio/visual tech in this time of social distancing.
Soooo, you're out of excuses. Time to do some planning.
Conclusion - TOD Deed + a Will is the Best Bet:
We can and should make the most of this time we have now. We can use this time to reassess what is important and take care of important to-do list items like estate planning. For the majority of us, this can be accomplished very easily using a TOD Deed and/or a Will. All can be accomplished in a few week's time using online video meetings and e-signatures. So, instead of being afraid in these times, let's own the moment and take care of our futures. Brene Brown put it best: "Someone, somewhere, will say, "Don't do it. You don't have what it takes to survive the wilderness." This is when you reach deep into your wild heart and remind yourself, "I am the wilderness.""