Kansas Probate Attorney Answers – What Is a TODD and How Can It Benefit My Estate?
April 1, 2014
Did you know that Kansas is one of only nine states that recognize an estate planning tool called the transfer–on–death–deed, or TODD? More important than that interesting fact, though, is what a TODD can do. If you own real property in Kansas, a TODD enables you to designate a beneficiary (or beneficiaries) to receive that property upon the event of your death by executing a deed during your lifetime.
This may seem quite unnecessary, since a will would also serve to pass your real property along to the beneficiaries of your choosing, but there’s more to the story than that. That “something more” is that a TODD passes that real property to your beneficiaries outside of probate. That’s right, no lines, no waiting, the transfer of your real property happens immediately upon the occasion of your death.
A TODD is also a better option than adding your beneficiaries’ names to the deed as joint tenants with rights of survivorship. When names are added to a deed as joint tenants, capital gains tax consequences, federal gift tax consequences, and other potential liabilities may occur. These “other liabilities” include things that could produce bizarre and unintended results, such as a beneficiary’s ex-spouse taking an interest in the land as part of a divorce proceeding or your beneficiary’s interest in the land becoming involved in a bankruptcy proceeding. With a TODD, your beneficiary has no interest in the property until your death, so your property may not be attached by creditors, considered in divorce proceedings, or otherwise subject to any consequences of your beneficiaries’ decisions during your lifetime.
In order for a TODD to be valid, it must be recorded. While that may seem concerning because recording a deed is such an official and permanent thing, landowners should know that they are free to change the beneficiary of a TODD at any time during their lifetime. Of course, if a change is made, a new deed should be recorded so as to make the change official.
Another interesting feature of TODDs is that they may help to keep the peace within the family, at least to some degree. Sometimes, there is a good reason that a person would want to make a disproportionately large gift to one of his or her beneficiaries, such as when an adult child takes the initiative to care for a parent when the parent can no longer live independently. If such a disproportionate transfer were to appear in a will, it could trigger a will contest in which the caregiver could have to spend considerable time and expense defending themself and their motives.
While a TODD may seem like a great estate planning tool, it may not be the right choice for all landowners under all circumstances. A knowledgeable Kansas probate attorney can help you to decide whether a TODD can help you to accomplish your estate planning goals. Contact the law office of J. Joseph Weber, P.A. online or call us for an initial consultation. Our Wichita office is open Monday through Friday, from 8 a.m. to 5 p.m. We also offer weekend and evening hours by appointment.