Nearly everyone who thinks about death, who cares about how much of an inheritance he will leave to his survivors, and who doesn't particularly want to make a lawyer wealthy, says to himself: "When I die, how can I keep probate costs to a minimum? Or to ZERO!!" In many situations, the answer to that question has often been either (a) "Create a trust", or (b) "You can't". Lawyers have been selling trusts for decades, and there are some good arguments for establishing a trust. However, trusts are always complicated arrangements, and lawyers like to charge a lot of money for drafting trust documents, such as right of survivorship and beneficiary deed papers. Recently in Minnesota (in 2008) a law was enacted which made it extremely easy and inexpensive for anyone to totally avoid the probate process without creating any complexity. If you live in a state other than Minnesota, you will perhaps be pleased to find that your state has already enacted, or is about to enact, a similar law. If your state doesn't yet have such a law, you perhaps should contact your legislative representative about proposing the change.
POD/TOD for Financial Accounts
For many years, probably throughout the entire United States, it was legally permissible and simple for the owner of any financial asset, such as a bank account, savings certificate, or stock brokerage account, to designate the account as being owned by one particular person, but payable on death (POD) or transferable on death (TOD) to someone else. The "someone else" would typically be the owner's spouse or children, but could be any beneficiary. By designating this asset as POD or TOD (the abbreviation depending primarily upon the financial institution's terminology, but they both mean the same thing) when the account was opened or anytime thereafter, the owner of the account could be assured that the account would pass directly to the designee(s) without a probate proceeding, and without any probate expenses, after the owner's death. And to make it all very attractive to the account owner, he could change the name of the POD/TOD beneficiary at any time without the consent or approval of that beneficiary. Very slick indeed!
Transfer on Death Deed
Until recently, at least in Minnesota, such an arrangement was legally impossible with real estate. If an owner of real estate attached someone else's name to the ownership of real estate, that "someone else" would have an ownership interest in the property and would be entitled to a share of the sale proceeds, and that "someone else's" signature and consent would be needed in order to sell or refinance the property. Consequently, it was very risky, and perhaps downright foolish, for owners to place their children's names on the title to their home, or on any other realty they owned.
The law in Minnesota now allows a real estate owner to sign and record a Transfer on Death Deed, whereby the owner designates the person(s) who are to become the owners of the property after the owner's death, all without a probate proceeding. Like the POD and TOD financial accounts, the owner can change this designation any time by recording with the appropriate real estate records office the document which changes the beneficiary designation. This change does not require any consent or approval of the beneficiary. Check it out. It's cool!
