Effective July 19, 2024, New York State passed into law what is known as a “Transfer on Death Deed,” RPL § 424. This essentially allows an owner of real estate to file a deed that upon their death transfers the real estate to one or more individuals. That transfer cannot be joint with the right of survivorship and if one of the transferees dies their share lapses and the remaining falls to the transferee. This action by the legislature codifies an issue that has been outstanding in real estate, but more importantly in estate planning for years; that is, the ability to leave a house to one or more individuals and avoid probate at the same time. Further, it allows an owner to do so in a manner that is revocable and does not transfer title, preventing the attachment of any liens or other liabilities of the transferee to the property. That is critically important, as in the past, when a life estate deed has been used, said transfer attached all of the transferees and their liabilities to the property. That could lead to complications after the death of the transferor.
Now, does this resolve estate planning issues? In a nutshell, it does not, because the use of a transfer on death deed does not solve multiple important problems. For instance: what if you need a plan to accommodate for a disabled child? What if a child has liabilities you need to protect them from? What if a child is in a nursing home? What if a child has a judgment or filed for bankruptcy? The transfer on death deed, while it can be effective, will not shield your beneficiary from liability, nor does it resolve the issue of the death of your beneficiary and whether or not you want their share of the real estate to pass to their children. Currently, the statute does not authorize the transfer of the asset of the real estate to the deceased transferee’s children. Further, a transfer on death deed would not cover bank accounts, certain personal property, and other important parts of an estate plan. As a result, it may not complete an individual’s estate planning effectively.
CONCLUSION
While I believe this is another tool in the estate planners tool belt, I do not believe it is a “cure all” by any means. It still leaves open a lot of questions on how to properly pass real estate to beneficiaries. However, in having the ability to utilize a transfer on death deed, we now have more options. This is particularly the case when we explain to clients who don’t have a large estate simple ways to transfer a house without creating a lot of liability prior to death.
Robert K. Hilton, is an attorney with the law firm of Hilton Estate & Elder Law, LLC, with offices in Utica, Boonville , Syracuse, Lowville and Gouverneur, NY. He has over thirty years of legal experience and currently concentrates in estate planning matters, including Wills, Powers of Attorney, Health Care Proxies, Revocable and Irrevocable Trusts, Asset Protection, Nursing Home/Medicaid planning and related litigation issues. He can be reached at (315) 624-9600 for free initial, confidential consultation. Visit us on the web at: www.Hiltonlawny_.com