Wisconsin’s Simple, Yet Powerful “Transfer on Death Deed”
September 2015
The Transfer on Death Deed (TOD Deed) is an extremely powerful yet relatively simple estate planning tool available to individuals who own real property in Wisconsin. Everyone who owns real property in Wisconsin must at least consider this tool, given the fact that it can completely eliminate the requirement to go through probate in Wisconsin, saving time and thousands of dollars.
The requirement for probate in Wisconsin is based on the value of “probate” assets. Probate assets are all assets that are not automatically transferred to another person or entity at death or not owned by a trust. If a decedent has $50,000 or more in probate assets, they will be required to transfer those assets through the probate court in the county where the decedent resided. If it is a non-resident that owned real property valued at $50,000 or more, it will be probated in the county the real property is located.
The power of the TOD Deed is that it turns the real property into a “non-probate” asset. As long as the remaining probate assets do not exceed $50,000, there will be no probate. Example: Decedent owned a home in Green Bay valued at $100,000; cabin on Lake Noquebay in Crivitz valued at $200,000; and personal property and car valued at $40,000. The decedent recorded a TOD Deed on both properties naming her children as the beneficiaries. Both properties will be transferred immediately at her death to her children. The remaining property will be transferred through an Affidavit of Transfer form. The result is no probate. Of course, this example is assuming that she also named beneficiaries on her bank accounts, IRAs, investments, life insurance, CD’s, etc.
Another powerful aspect of the TOD Deed is that it is available to every Wisconsin property owner because the property does NOT need to be owned free and clear. The real property can have a mortgage, second mortgage, and an equity line of credit and the owner(s) can still record a TOD Deed. At the death of the owner(s), the beneficiaries will receive it subject to any debts secured by the real property. This can be an important distinction because in a probate, if there are proceeds from the sale of real property, they can be used to pay the debts of the decedent. Additionally, the TOD Deed transfer process can be completed within weeks, instead of months.
While a benefit of the TOD Deed can be to prevent a lengthy and costly probate, it is not always the most appropriate method to transfer real property at death. If there is a need to protect assets for minor children or protect it from adult children, their creditors or divorces, a TOD Deed may not be advisable. If there are a number of beneficiaries, it may not be wise for them all to own the real property together. For example, if it may be burdensome. A TOD Deed can be useful, but estate planning is unique to each person and family, which is why it’s important to discuss your goals with an estate planning professional.
