For many people, the biggest or only real asset that they own aside from personal mementos is their home. As such, it’s often their top concern when it comes to passing it on to their heirs.
Nebraska, along with a handful of other states, offers an option that can make it easier on you and your heirs. Under Nebraska law, a property owner can convey real property, like a home or land, upon his or her death directly to an heir.
Known as Transfer on Death deeds, there are several distinct factors to keep in mind:
1. Unlike quit claim deeds, joint tenancy with the right of survivorship and many other forms of deed transfer, you retain full ownership and control of your property with a TOD deed. Your heir’s ownership interest only begins when you die.
2. You can create and revoke a TOD deed without notice to the beneficiary of the deed. This can be extremely useful if you think that your potential heirs may quibble about your decision or you simply change your mind about whom you want to inherit your home.
3. You can still sell, lease or transfer the property at will during your lifetime, if you so choose, without the consent of the beneficiary named in the TOD deed. If you do so, the TOD terminates.
4. Creating the TOD is not considered a gift for tax purposes because it is revocable, but it does still subject the property to state inheritance taxes.
5. If the TOD concerns farmland, you have to specifically transfer not only the farmland but also your interest in any crops being grown on the land. Otherwise, the land will transfer without the automatic right to any crops or proceeds from their sale. That interest will be held up with the remainder of your estate.
Transfer on death deeds also have to be properly executed and filed after your death. That makes it wise to consult with an attorney, rather than attempt to do the paperwork on your own. Additionally, while it’s a useful tool for estate planning that more Nebraskans will probably take advantage of in the future, it may or may not be right for your situation.
Source: Nebraskalegislature.gov, “Nebraska Revised Statute 76-3405,” accessed Jan. 19, 2017