What are the tax pros and cons when you designate "Transfer on Death" on mutual funds or other financial instruments?

November 09, 2007

Posted by MerHeros

( 2 ratings )

The enactment of a transfer-on-death deed statute provides an alternative to probate, as well as to many other problematic methods of property transfer, benefiting clients and simplifying the real property transfer system. In a growing number of states such transfer-on-death deeds are providing an inexpensive alternative to probate, as well as providing protection for the elderly client against unintended burdens against his or her real property.

Important notes:
. Transfer-On-Death does not eliminate any estate taxes that otherwise would have been payable.
. The transfer-on-death deed is especially effective for an individual whose only substantial asset is the home in which he or she lives.
. Same-sex couples and unmarried heterosexual couples, the transfer-on-death deed can avoid the litigated issue of adding the partner as a joint tenant to a deed to property purchased solely with the assets of one party. The transfer-on-death deed permits this tangible acknowledgment of the commitment of the couple by placing the partner on the deed as a grantee-beneficiary rather than a co-owner.

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