Pub. 6 2015 Issue 1

www.wvbankers.org 20 West Virginia Banker I n 2014, the West Virginia Legislature enacted the Uniform Real Property Transfer on Death Act (the “Act”), cod- ified as Chapter 36, Article 12 of the West Virginia Code. The Act is an initiative of the National Conference of Commis- sioners on Uniform State Laws, the same group responsible for the Uniform Com- mercial Code. The Act, which has been adopted in thirteen jurisdictions to date, provides for the use of transfer on death deeds (“TODD”), also known as benefi- ciary deeds, as an estate planning tool in West Virginia. What Is a Transfer on Death Deed? A TODD allows an owner of real proper- ty to designate one or more beneficiaries who will obtain title to the property upon the death of the owner. Unlike other available options, such as a deed creating a joint tenancy, a TODD creates no present ownership interest in the property, and the property owner can revoke the TODD at any time or designate a different TODD beneficiary without the consent of any existing TODD beneficiary. In fact, a TODD may be revoked even if it contains an express provision asserting that it can- not be revoked. The Act requires that a TODD “contain the essential elements and formalities of a properly recordable inter vivos deed,” and it must be recorded before the transferor’s death in the office of the Clerk of the County Commission of the county where the property is located. But unlike other types of deeds, a TODD may be made without consideration, and neither notice nor delivery to the beneficiary is required. For real property that is owned by multiple joint tenants, if only one of the joint tenants creates a TODD and then prede- ceases another joint tenant, the TODD will be ineffective to transfer the property to the named beneficiary. Since TODDs are revocable at any time, this problem is not resolved even if all joint tenants create a TODD together. Joint tenants must be cognizant that a surviving joint tenant could thwart the intent of the earlier-to-die joint tenant. Do Transfer on Death Deeds Matter? At first blush, a TODD may seem like the perfect solution to some common estate planning problems—a “poor man’s trust,” if you will. But upon further inspec- tion, the advantages are not so clear-cut. Unlike some other states, West Virginia does not have any exception to probate for small estates. So, if a decedent has any probate assets beyond the property subject to a TODD, probate will still be neces- sary. Since West Virginia has short-form settlements, and probate fees are relatively small, it merits consideration whether removing one asset from probate via a TODD provides a significant benefit. The Act does provide an important benefit in one area that is significant to many West Virginians: Medicaid estate recov- ery. Since enactment of the Omnibus Budget Reconciliation Act of 1993, federal law has required that states attempt to recover from the estates of Medicaid recip- ients an amount equal to the cost of any Medicaid long-term care benefits received. For individuals of modest means, Medic- aid estate recovery can easily claim most or all of their estate’s value. For the typi- cal estate in which the family home is the asset of greatest value, the home could be sold and the proceeds taken for Medicaid. However, limits exist on the reach of Medicaid estate recovery, and one of those limitations creates an opportunity for use of a TODD. States are not required to By David G. Hammond and Jared J. Jones Lewis Glasser Casey & Rollins, PLLC Do You Know TODD? An Overview of the West Virginia Real Property Transfer on Death Act