| NEW WV LAW ALLOWS PROPERTY TO TRANSFER TO BENEFICIARY - Avoiding Probate Process
By Paul L. Hicks,Bowles Rice LLP, Parkersburg
A West Virginia law now enables real property to pass simply and directly to a beneficiary, without going through probate.
The new law, called the West Virginia Transfer on Death Act, is in line with the Uniform Real Property Transfer on Death Act (URPTODA), which has been adopted by more than a dozen states across the country.
The new law's impact touches nearly all West Virginia residents seeking to leave their real property (possibly their major asset), such as a house, farm or oil and gas mineral rights, to their children or other beneficiaries.
It is expected to become an important tool in estate planning, nursing home planning, Medicaid planning, and Elder Law.
The Transfer on Death Act builds upon existing state statutes, where an individual routinely passes personal property to a named beneficiary outside of probate. Common examples include a beneficiary designation in a life insurance policy or pension plan, registration of securities in a transfer on death (TOD) form, and a payable on death bank account.
The new law also details the operation and effect of the TOD deed and provides a standardized method for the straightforward non-probate transfer of real property.
During the owner's lifetime, the owner may name a beneficiary of a TOD deed, although the beneficiary has no immediate interest in the property and the owner retains full power to transfer or encumber the property or to revoke the deed. On the owner's death, the property passes to the beneficiary, much like the survivorship feature of joint tenancy and the personal property mentioned above.
The TOD deed presents several advantages over joint tenancy. Because the TOD deed does not convey an immediate interest to the beneficiary, the property is not subject to partition or to the beneficiary's creditors. The deed remains revocable, enabling the owner to make a different disposition of the property. It does not trigger an acceleration clause in a mortgage or a property tax reassessment during the transferor's life. In addition, it does not create adverse Medicaid consequences for either the owner or the beneficiary.
The TOD deed also may be preferable to an inter vivos trust (living trust) in many circumstances. If the decedent's only significant asset is the family home, for example, the TOD deed provides a simple, inexpensive, understandable means for the decedent to pass the property directly to heirs without probate.
Summary:
Prior to the law's adoption, West Virginia law did not contain a straightforward mechanism to pass real property outside of probate, directly to a beneficiary at death.
Now, with the law enacted, West Virginia residents are afforded an uncomplicated, reliable and affordable means of passing real property, which may be the decedent's major asset, directly to a beneficiary.
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