For many people, the primary motivation for creating an estate plan is the desire to provide for loved ones in the event of death. Along with ensuring that your estate assets are passed down to your designated beneficiaries, a well thought out estate plan can also help make sure your beneficiaries receive those assets as soon after your death as possible. As the Indianapolis estate planning attorneys at Frank & Kraft explain, making use of the Indiana Transfer on Death Property Act is one way to transfer assets quickly after your death.
The Problem with Probate
If you have a spouse, children, parents, or other loved ones who financially depend on you, an important estate planning goal is to ensure that your loved ones have access to much-needed assets as soon as possible after you are gone. Unfortunately, probate can drag out the time it takes for beneficiaries to receive assets. Probate is the legal process that is often required following a death. While the ultimate goal of probate is to transfer assets to beneficiaries and/or heirs of the estate, several steps must be completed first. For example, creditors of the estate must be notified and provided with the opportunity to file claims against the estate. Any challenges to the validity of the Will must also be litigated before assets can be released. It can take months, even years, for assets to finally be released to the new owners if those assets have to go through probate. One of the many estate planning strategies available to help your estate avoid probate in the State of Indiana is the use of Transfer on Death Property Act.
What Is the Indiana Transfer on Death Property Act?
The Transfer on Death Property Act (TDPA) can be found at Indiana Code 32-17-14 et. seq. The overall purpose of the TDPA is to allow the owner of real property to transfer his/her legal interest in that property to a designated beneficiary or beneficiaries at the time of death. When interest in property is transferred using the TDPA the property does not have to go through probate, meaning the beneficiary takes ownership of the property immediately following the death of the previous owner.
Because people are often familiar with the “Payable on Death (POD)” option offered on financial accounts, it may be beneficial to think of a transfer on death property deed as similar to a POD designation on a bank account. When you designate a bank account, for example as a POD account you name a beneficiary. Immediately after your death, ownership of the bank accounts legally transfers to the beneficiary without the need for legal action.
It is important to note that with a TOD deed or a POD account, the designated beneficiary has no legal ownership interest in the asset prior to the death of the owner. This is the primary difference between owning assets jointly and a TOD/POD designation. When you jointly own property or other assets, the co-owner has a present legal ownership interest in the asset. For example, if you and your spouse own real property jointly with rights of survivorship, your ownership interest in the property will automatically transfer to your spouse upon your death, just as with a TOD deed; however, your spouse also has an equal ownership interest in the property while you are alive. If you used a Transfer on Death deed instead of joint ownership, your ownership interest in the property would pass to your spouse upon your death; however, he/she would have no legal ownership interest in the property while you are alive.
For a Transfer on Death deed to be valid, it must be executed by the owner of the real property, or their legal representative, and be recorded in the county where the real property is located. Upon the death of the property owner, the designated beneficiary takes legal ownership of the property without the need for the property to pass through probate.
Contact Indianapolis Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to incorporate the Indiana Transfer on Death Property Act into your estate plan, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
- Will I Still Have Control Over Assets If I Transfer Them into a Trust? - October 3, 2023
- How Does Life Insurance Fit into My Estate Plan? - September 28, 2023
- Will Medicaid Pay a Family Member to Care for Me in Indiana? - September 26, 2023