When planning how to pass on your assets, reducing complications for your loved ones is likely a top priority. In Montana and many other states, one of the simplest and most effective tools for doing this is a Transfer on Death (TOD) deed as some Kalispell, MT probate lawyers can share with you. This straightforward legal document could help you transfer real estate to your beneficiaries without the delays and costs of probate while minimizing the capital gains taxes your heirs will have to pay when the property is eventually sold.
Here’s why a TOD deed could be a game-changer for your estate plan:
- Avoiding Probate
One of the biggest advantages of a TOD deed is that it allows you to bypass the probate process. When you pass away, any property transferred through a TOD deed goes directly to your named beneficiary — typically with no court involvement required.
Avoiding probate means:
- Faster Property Transfer: Your beneficiary could inherit the property almost immediately, without waiting months (or even years) for the court to settle the estate.
- Lower Costs: Probate can be expensive, with attorney fees, court costs, and other expenses. With a TOD deed, your heirs could avoid these fees entirely, leaving more of your estate for them to inherit.
- Minimizing Capital Gains Taxes
Founded in 2012, we work often with these transfers, and we can share that another significant benefit of using a TOD deed is the potential to reduce capital gains taxes for your beneficiaries. When a property is transferred through a TOD deed, the beneficiary receives it with a step-up in basis, meaning the beneficiary’s basis is “stepped up” to its market value at the time of your death. If your beneficiary later decides to sell the property, their taxable gain will be based only on the appreciation after your death, rather than the total increase in value from when you originally purchased the property.
- Maintaining Control During Your Lifetime
With a TOD deed, you remain the owner of your property while you’re alive. You can live in it, sell it, or even revoke the deed if your plans change. Your named beneficiary only gains rights to the property after your passing, ensuring you keep full control for as long as you need. The nice thing about these transfers is the control you maintain and the fact that you can change the beneficiary if you want to or need to.
- Cost-Effective Estate Planning
Setting up a TOD deed is a simple and affordable option compared to more complex estate planning tools, like setting up a trust. It involves minimal paperwork, and once filed, it could provide a smooth transition of property to your heirs without the burden of probate or tax complications.
If you’re interested in exploring how a TOD deed can fit into your estate plan, contact Silverman Law Office, PLLC today. Our experienced attorneys can guide you through the process and ensure your estate plan is tailored to your unique needs. Licensed in Montana and North Dakota, our lawyers are ready to help you with all your needs!