The short answer is probably not. The long answer is a bit more complicated.
First, what is a TOD Deed?
A Transfer on Death Deed (TOD deed) is a legal document that allows a property owner to designate one or more beneficiaries who will receive the property upon the owner's death. The property remains under the owner's control during their lifetime.
How Does it Work?
If you search the internet, you may find lots of articles encouraging people to use Transfer on Death deeds for all of their real estate. These articles will mostly come from outside Washington State and assert that a TOD deed will allow you to avoid probate, saving you time and money. In many states, where probate is expensive and/or where probate fees are based on the value of the estate, that may be good advice. In Washington State, however, these deeds tend to cost people more and can lengthen the process of selling property. I'll explain why more below. But first, let me acknowledge some of the pros of a Transfer on Death deed, especially when compared to some worse alternatives.
(1) You will retain legal ownership and control of your property during your life. Some people are so scared of the costs of probate that they opt to avoid it by gifting their child their real estate during their life and/or adding their child's name to their property. That can be a perilous and costly mistake. An adult child whose name is on real estate can lose their interest in a divorce or bankruptcy, meaning that you can lose your home or need to buy an ex-in-law out of their interest to keep it. Once you add an adult child to a property, you can't change your mind, sell the property, or refinance without their permission. In some cases, the transfer might be considered Medicaid fraud if you need public benefits within five years of the transfer, thereby disqualifying you from benefits. It will also usually disqualify your property from getting a step-up in basis for capital gains purposes at your death. With property values in the Seattle area having risen so much over the last few decades, this can easily lead to tens of thousands of dollars in unnecessary capital gains taxes on very little value.
(2) In some circumstances, you may be able to avoid doing a probate. In Washington State, a probate is required whenever you are transferring real estate or more than $100,000 in assets that don't already have a non-probate beneficiary designation. That means that if you have a TOD deed; and have beneficiaries on all of your other accounts; and your personal property, including all tangible property and vehicles are less than $100,000; and you have no unfinished financial matters at the time of your death; and your death does not require the filing of a wrongful death claim or insurance claim; and there are no disputes between your family members or between your family members and creditors, you would likely not need to do a probate. That is a lot of ifs, which is why, in my experience, even when people have spent the time and money to set up TOD deeds or other probate avoidance vehicles, about 90% of the time they still end up going through a probate, either because they must or because of the benefits of a probate, which are discussed more below. Nevertheless, if you lived in a state like California, where probates are heavily court-supervised, slow, and can easily cost upwards of $40,000, even a slight chance of avoiding probate might be worthwhile. In contrast, Washington State's non-intervention probate process for people with a will is generally considered the second least expensive in the country. In our office, straightforward probates with all adult beneficiaries are currently usually completed for about $2,500 to $3,500, including court fees and attorney fees. While that isn't a negligible sum, it makes avoiding probate much less valuable, especially compared to the cost of creating and administering non-probate assets and the benefits of probate.
(3) TOD deeds can be revoked during your lifetime. TOD deeds are just as expensive to revoke as they are to create. Nevertheless, unlike gifts or irrevocable trusts, you can change your mind and revoke a TOD if you need to.
The "Downside" of TOD deeds?
Given the above, you might wonder why attorneys in Washington don't frequently recommend TOD deeds. Unfortunately, these benefits come with some significant potential downsides.
(1) The TOD deed beneficiary can get stuck with more than their fair share of creditor claims and taxes. Under RCW 11.18.200, beneficiaries of nonprobate assets like TOD deeds, take those assets subject to all the decedent's liabilities, claims, estate taxes, and administrative costs. That means the IRS and other creditors can go after that beneficiary for 100% of their claims and taxes. Because attaching a lien to real estate is a relatively easy way to guarantee payment of those claims, it can be tempting for them to target the beneficiary of a TOD deed with all those costs rather than spreading the claim among the beneficiaries of other assets. That may mean the beneficiary of the TOD deed needs to pay all these costs and then try to collect a fair share from the other beneficiaries, informally or through the courts.
(2) TOD property remains subject to creditor claims longer when passing through probate. Part of the probate process involves notifying known and unknown creditors. Those notices start a short 4-month period during which creditors must file their claims with the court or be time-barred from ever making a claim. This four-month statute of limitations doesn't apply to TOD-deed property, and creditors can make claims for up to 2 years after death. That also greatly increases the beneficiary's uncertainty and the likelihood that the decedent's medical bills, credit cards, and other liabilities will need to be paid by the beneficiary.
(3) Property may not be easily sold for the first two years after death. When property passes through probate, it can be listed and sold as soon as the probate opens, which can be as quickly as 14 days after death. While the Personal Representative is wise to retain enough of these proceeds to cover taxes and creditors until the four-month period passes, if they have non-intervention powers through the will, they can make interim distributions as soon as the property is sold. In contrast, if the property passes through a TOD deed, the title company may not be willing to issue title insurance to allow it to be sold to a third party until either the 2-year creditor period has passed or the beneficiary does a "non-probate" creditor process through the courts. That process usually costs almost as much as a full probate and takes at least four months to complete. That means that the beneficiary may not be able to sell the house right away and be saddled with extra months of mortgage, utilities, and other carrying costs in the meantime.
(4) The process for transfer may be confusing. Tens of thousands of probates occur each year in Washington State, which means the process for transferring property through probate is well known to attorneys and real estate agents. Because TOD deeds are relatively new in Washington and uncommon, people frequently fail to take the steps necessary to clear title after their loved one dies. As a result, they may encounter complications when they try to sell it in the future, which can be difficult for their real estate agent to navigate. If they fail to fully complete the process during their life, it may be necessary for their family members to open multiple sequential probates to clear title at their death, which can create unnecessary delays and costs.
(5) TOD deeds are more vulnerable to challenges than wills. Both wills and TOD deeds require the same sort of testamentary capacity on the part of the signer and must be free of undue influence or coercion. However, when a will is executed, witnesses sign affidavits at the time attesting to capacity and the circumstances of the signing. If the will is signed before an attorney, that attorney must have investigated and confirmed the client's capacity and that the client is signing the document with advice and free of undue influence. Those conditions mean that challenges to wills are infrequent and rarely successful. TOD deeds don't have witnesses. While notarization is required, the notary only guarantees the signer's identity, not their capacity. As a result, TOD deeds can be easier for family members to challenge, and the beneficiary will often have less evidence to protect their claims.
(6) There can be problems with interpretation and multiple beneficiaries. Wills themselves and the case law surrounding them create rules about what should happen if a beneficiary needs to disclaim property or dies before the original owner. Those don't exist in TOD deeds where the language is sparse, and there is no supporting case law. That can easily lead to unintended consequences. For example, if you have two adult children and you leave your home to both of them in your will and one of them either dies before you or needs to disclaim the property because they have issues with creditors, the property will usually go to their children. With a TOD deed, that isn't an option. Instead, the property would go 100% to the other adult child, which is rarely what people want.
(7) They can't be used for minor beneficiaries. Property left to minors must be held in a trust or custodial account until the child is at least 18, and is often held in those vehicles until they are at least 25. Those trusts or custodial accounts are fairly easy to establish when needed through a will, without creating a currently funded trust. That isn't possible through a TOD deed. The property can't be transferred directly to a minor. It can only be transferred to a trust for the minor that has already been established and funded during the original owner's life, which requires fairly extensive legal paperwork and may trigger the need for notices, annual reports, and tax returns each year, even before the original owner's death.
(8) They can't easily be used for disabled beneficiaries. Receiving a direct inheritance as a person with a disability can be a huge problem. Not only might there be legitimate concerns about how they would manage the property, but receiving the property will usually disqualify them from any public benefits they receive, may require repayment of past benefits, and usually requires all assets to be spent down before they can reapply for benefits. Those issues can be fairly easily avoided in a well-written will through a third-party special needs trust. Even where that planning didn't occur, or when the beneficiary becomes disabled long after the will was written or even as part of the same accident that led to the original property owner's death, the probate process, in most cases, allows the court to create a first-party special needs trust to avoid some of these issues. Because the TOD deed creates a legally recognized immediate transfer, there's no way to avoid these consequences for disabled beneficiaries.
(9) They can create extra expenses and/or be invalidated when property is sold or refinanced. While the law says that property subject to a TOD deed is controlled only by the current owner, some mortgage companies and title companies will nevertheless require that person's signature on any documents to sell or refinance property. At best, this creates extra hassle and expense. At worst, it can hold the current property owner hostage to the beneficiary's preferences. That can be particularly problematic if they face a conflict of interest, which is common because selling a property completely invalidates a TOD deed, leaving the beneficiary with nothing, and taking out a mortgage creates a debt that will ultimately reduce the value of the beneficiary's interest in the property. Given that people's equity in their real estate is often their biggest asset and a key part of their long-term financial security, practically losing control of this asset to someone, even a loved one, whose interests are opposed, can be a risky prospect. Even if the beneficiary fully cooperates with the process, the sale of the property makes the creation of the TOD deed a waste of money, and refinancing often requires that a second TOD deed be filed, doubling the expense.
(10) TOD deeds are easily accessible public records during your life. During the probate process, the will is filed with the court and can be accessed by the public through the court files. That process doesn't happen until after your death, and the process to search those court files isn't particularly easy for the general public to navigate. Older revoked wills never become public. TOD deeds are recorded in the property records as soon as they are executed and can be found through an easy internet search by anyone. Even revoked TOD deeds are part of the property's permanent, easily accessible title records. That means that any family member, friend, or nosy neighbor can easily see who you are leaving that property to at any point and see every timee you ever change your mind. This can easily lead to family conflict and pressure on you regarding your plans during your lifetime and potential embarrassment or additional hurt feelings after your death.
(11) Revoking a TOD costs as much as creating one. A will can be revoked by tearing up the original and amended by simply signing a new will that contains those changes, or by signing a codicil to the original will. The revocation of a TOD deed must be recorded with the county or through the recording of a later inconsistent TOD deed. Each of these transactions requires not only legal assistance in drafting and executing the documents, but also recording fees with the county and recording of real estate excise affidavits.
(12) Forgotten TOD deeds can screw up estate planning. Estate planning isn't something most people relish doing. Most people are happy to store their plan away and forget it until there is a major life change. When their estate plan is contained in their will, it is easy to pull it up, review their older choices, and make changes. We frequently have client surprised by decisions in their older wills that they forgot they even made, that need to be updated as their lives evolve. If there are major assets, like a house, that have been gifted through a TOD deed, and the client doesn't remember that detail, the old TOD deed will trump any new planning they do, even if they have remarried or had more kids. That means people need to pay much more attention to the details of their planning over the years, which most people would rather avoid.
(13) TOD deeds won't necessarily mean that you don't need to do probate, and doing two processes always costs more than doing one. Remember all those "ifs" above about when probate can be avoided? The reality is that, in most cases, people do end up doing a probate. People have larger accounts without beneficiaries or even just valuable vehicles or possessions that put them over the threshold, even without their real estate. They have unresolved issues with neighbors, businesses, or the IRS that require a personal representative to resolve. They receive money after their death, such as tax refunds or dividend checks, which are most easily redeemed through probate. Their death prompts a wrongful death claim or insurance claim that also requires a personal representative. Conflict can arise among family members or with asset holders. In some cases, the family just wants the ease and security from creditors that comes with going through the formal probate process. For people who have invested in a TOD deed to avoid probate, needing to do one anyway, which happens most of the time, means that they are doing a probate plus a TOD deed administration, which increases their overall expenses beyond what a probate would cost. Even if they avoid a probate, dealing with small estate affidavits, TOD affidavits, and beneficiary claim forms can ultimately take as much, if not more, time and money than just consolidating the whole process into a single probate.
(14) Even if probate is avoided, often no significant money is saved. A TOD deed costs money to draft and record, may cost extra every time you refinance, and will still cost money to administer after you die. Given those expenses and how relatively inexpensive the probate process is in Washington, it is difficult to have any significant money be saved through a TOD deed, even if you were one of the minority of cases that didn't also require a probate. Even if you just need to refinance and rerecord the TOD deed one time, you are probably going to spend every bit as much on those deeds and the affidavits after death as a probate would have cost.
(15) You are signing up to be a guinea pig. While Washington State has allowed TOD deeds since 2014, they are so rare that there are no cases interpreting the state's TOD deed statute. Our firm works on dozens of probates and other estate administrations each year, and we have never had a client come in with a TOD deed. Being an early adopter of new technology can be fun. Being an early adopter of a complex real estate titling instrument isn't as much fun. Right now, each person who executes them is signing up to potentially be the first TOD deed ever interpreted by Washington State courts, with all the uncertainty and complexity that entails. That is part of why many firms, ours included, simply don't offer these deeds to clients. We don't feel like we can realistically give clients a full picture of all the risks and pitfalls with so much still left to be determined. That said, there are some firms that love to be on the cutting edge of new trends that do offer these deeds to clients. If you are sure you want one, we are happy to provide a referral to one of those offices.
Hope this is helpful. Please remember that the above is being provided for informational purposes only and isn't individualized legal advice. It is always best to seek individual advice based on the application of the law to the unique facts and circumstances of each situation. That can only be provided after a consultation with a legal professional familiar with the specific facts of your case. Please also note that all information contained herein applies only to the laws in Washington State.
First, what is a TOD Deed?
A Transfer on Death Deed (TOD deed) is a legal document that allows a property owner to designate one or more beneficiaries who will receive the property upon the owner's death. The property remains under the owner's control during their lifetime.
How Does it Work?
- Creation and Filing: The property owner creates a TOD deed, naming the beneficiary or beneficiaries who will inherit the property upon the property owner's death. This deed must be signed, notarized, and recorded, along with an excise tax affidavit, at the county recorder's office before the death. The deed must meet all legal requirements, including a complete and accurate property description. The names of grantors must exactly match the names of the grantees in the last recorded deed.
- Control During Your Life: The property owner retains complete control over the property while they are alive. They can sell, mortgage, or lease the property without the beneficiaries' consent.
- Transfer at Death: Upon the owner's death, the property transfers to the named beneficiaries outside of probate. The beneficiary will still need to file the original owner's death certificate, an affidavit regarding transfer of ownership, and a real estate excise tax affidavit.
If you search the internet, you may find lots of articles encouraging people to use Transfer on Death deeds for all of their real estate. These articles will mostly come from outside Washington State and assert that a TOD deed will allow you to avoid probate, saving you time and money. In many states, where probate is expensive and/or where probate fees are based on the value of the estate, that may be good advice. In Washington State, however, these deeds tend to cost people more and can lengthen the process of selling property. I'll explain why more below. But first, let me acknowledge some of the pros of a Transfer on Death deed, especially when compared to some worse alternatives.
(1) You will retain legal ownership and control of your property during your life. Some people are so scared of the costs of probate that they opt to avoid it by gifting their child their real estate during their life and/or adding their child's name to their property. That can be a perilous and costly mistake. An adult child whose name is on real estate can lose their interest in a divorce or bankruptcy, meaning that you can lose your home or need to buy an ex-in-law out of their interest to keep it. Once you add an adult child to a property, you can't change your mind, sell the property, or refinance without their permission. In some cases, the transfer might be considered Medicaid fraud if you need public benefits within five years of the transfer, thereby disqualifying you from benefits. It will also usually disqualify your property from getting a step-up in basis for capital gains purposes at your death. With property values in the Seattle area having risen so much over the last few decades, this can easily lead to tens of thousands of dollars in unnecessary capital gains taxes on very little value.
(2) In some circumstances, you may be able to avoid doing a probate. In Washington State, a probate is required whenever you are transferring real estate or more than $100,000 in assets that don't already have a non-probate beneficiary designation. That means that if you have a TOD deed; and have beneficiaries on all of your other accounts; and your personal property, including all tangible property and vehicles are less than $100,000; and you have no unfinished financial matters at the time of your death; and your death does not require the filing of a wrongful death claim or insurance claim; and there are no disputes between your family members or between your family members and creditors, you would likely not need to do a probate. That is a lot of ifs, which is why, in my experience, even when people have spent the time and money to set up TOD deeds or other probate avoidance vehicles, about 90% of the time they still end up going through a probate, either because they must or because of the benefits of a probate, which are discussed more below. Nevertheless, if you lived in a state like California, where probates are heavily court-supervised, slow, and can easily cost upwards of $40,000, even a slight chance of avoiding probate might be worthwhile. In contrast, Washington State's non-intervention probate process for people with a will is generally considered the second least expensive in the country. In our office, straightforward probates with all adult beneficiaries are currently usually completed for about $2,500 to $3,500, including court fees and attorney fees. While that isn't a negligible sum, it makes avoiding probate much less valuable, especially compared to the cost of creating and administering non-probate assets and the benefits of probate.
(3) TOD deeds can be revoked during your lifetime. TOD deeds are just as expensive to revoke as they are to create. Nevertheless, unlike gifts or irrevocable trusts, you can change your mind and revoke a TOD if you need to.
The "Downside" of TOD deeds?
Given the above, you might wonder why attorneys in Washington don't frequently recommend TOD deeds. Unfortunately, these benefits come with some significant potential downsides.
(1) The TOD deed beneficiary can get stuck with more than their fair share of creditor claims and taxes. Under RCW 11.18.200, beneficiaries of nonprobate assets like TOD deeds, take those assets subject to all the decedent's liabilities, claims, estate taxes, and administrative costs. That means the IRS and other creditors can go after that beneficiary for 100% of their claims and taxes. Because attaching a lien to real estate is a relatively easy way to guarantee payment of those claims, it can be tempting for them to target the beneficiary of a TOD deed with all those costs rather than spreading the claim among the beneficiaries of other assets. That may mean the beneficiary of the TOD deed needs to pay all these costs and then try to collect a fair share from the other beneficiaries, informally or through the courts.
(2) TOD property remains subject to creditor claims longer when passing through probate. Part of the probate process involves notifying known and unknown creditors. Those notices start a short 4-month period during which creditors must file their claims with the court or be time-barred from ever making a claim. This four-month statute of limitations doesn't apply to TOD-deed property, and creditors can make claims for up to 2 years after death. That also greatly increases the beneficiary's uncertainty and the likelihood that the decedent's medical bills, credit cards, and other liabilities will need to be paid by the beneficiary.
(3) Property may not be easily sold for the first two years after death. When property passes through probate, it can be listed and sold as soon as the probate opens, which can be as quickly as 14 days after death. While the Personal Representative is wise to retain enough of these proceeds to cover taxes and creditors until the four-month period passes, if they have non-intervention powers through the will, they can make interim distributions as soon as the property is sold. In contrast, if the property passes through a TOD deed, the title company may not be willing to issue title insurance to allow it to be sold to a third party until either the 2-year creditor period has passed or the beneficiary does a "non-probate" creditor process through the courts. That process usually costs almost as much as a full probate and takes at least four months to complete. That means that the beneficiary may not be able to sell the house right away and be saddled with extra months of mortgage, utilities, and other carrying costs in the meantime.
(4) The process for transfer may be confusing. Tens of thousands of probates occur each year in Washington State, which means the process for transferring property through probate is well known to attorneys and real estate agents. Because TOD deeds are relatively new in Washington and uncommon, people frequently fail to take the steps necessary to clear title after their loved one dies. As a result, they may encounter complications when they try to sell it in the future, which can be difficult for their real estate agent to navigate. If they fail to fully complete the process during their life, it may be necessary for their family members to open multiple sequential probates to clear title at their death, which can create unnecessary delays and costs.
(5) TOD deeds are more vulnerable to challenges than wills. Both wills and TOD deeds require the same sort of testamentary capacity on the part of the signer and must be free of undue influence or coercion. However, when a will is executed, witnesses sign affidavits at the time attesting to capacity and the circumstances of the signing. If the will is signed before an attorney, that attorney must have investigated and confirmed the client's capacity and that the client is signing the document with advice and free of undue influence. Those conditions mean that challenges to wills are infrequent and rarely successful. TOD deeds don't have witnesses. While notarization is required, the notary only guarantees the signer's identity, not their capacity. As a result, TOD deeds can be easier for family members to challenge, and the beneficiary will often have less evidence to protect their claims.
(6) There can be problems with interpretation and multiple beneficiaries. Wills themselves and the case law surrounding them create rules about what should happen if a beneficiary needs to disclaim property or dies before the original owner. Those don't exist in TOD deeds where the language is sparse, and there is no supporting case law. That can easily lead to unintended consequences. For example, if you have two adult children and you leave your home to both of them in your will and one of them either dies before you or needs to disclaim the property because they have issues with creditors, the property will usually go to their children. With a TOD deed, that isn't an option. Instead, the property would go 100% to the other adult child, which is rarely what people want.
(7) They can't be used for minor beneficiaries. Property left to minors must be held in a trust or custodial account until the child is at least 18, and is often held in those vehicles until they are at least 25. Those trusts or custodial accounts are fairly easy to establish when needed through a will, without creating a currently funded trust. That isn't possible through a TOD deed. The property can't be transferred directly to a minor. It can only be transferred to a trust for the minor that has already been established and funded during the original owner's life, which requires fairly extensive legal paperwork and may trigger the need for notices, annual reports, and tax returns each year, even before the original owner's death.
(8) They can't easily be used for disabled beneficiaries. Receiving a direct inheritance as a person with a disability can be a huge problem. Not only might there be legitimate concerns about how they would manage the property, but receiving the property will usually disqualify them from any public benefits they receive, may require repayment of past benefits, and usually requires all assets to be spent down before they can reapply for benefits. Those issues can be fairly easily avoided in a well-written will through a third-party special needs trust. Even where that planning didn't occur, or when the beneficiary becomes disabled long after the will was written or even as part of the same accident that led to the original property owner's death, the probate process, in most cases, allows the court to create a first-party special needs trust to avoid some of these issues. Because the TOD deed creates a legally recognized immediate transfer, there's no way to avoid these consequences for disabled beneficiaries.
(9) They can create extra expenses and/or be invalidated when property is sold or refinanced. While the law says that property subject to a TOD deed is controlled only by the current owner, some mortgage companies and title companies will nevertheless require that person's signature on any documents to sell or refinance property. At best, this creates extra hassle and expense. At worst, it can hold the current property owner hostage to the beneficiary's preferences. That can be particularly problematic if they face a conflict of interest, which is common because selling a property completely invalidates a TOD deed, leaving the beneficiary with nothing, and taking out a mortgage creates a debt that will ultimately reduce the value of the beneficiary's interest in the property. Given that people's equity in their real estate is often their biggest asset and a key part of their long-term financial security, practically losing control of this asset to someone, even a loved one, whose interests are opposed, can be a risky prospect. Even if the beneficiary fully cooperates with the process, the sale of the property makes the creation of the TOD deed a waste of money, and refinancing often requires that a second TOD deed be filed, doubling the expense.
(10) TOD deeds are easily accessible public records during your life. During the probate process, the will is filed with the court and can be accessed by the public through the court files. That process doesn't happen until after your death, and the process to search those court files isn't particularly easy for the general public to navigate. Older revoked wills never become public. TOD deeds are recorded in the property records as soon as they are executed and can be found through an easy internet search by anyone. Even revoked TOD deeds are part of the property's permanent, easily accessible title records. That means that any family member, friend, or nosy neighbor can easily see who you are leaving that property to at any point and see every timee you ever change your mind. This can easily lead to family conflict and pressure on you regarding your plans during your lifetime and potential embarrassment or additional hurt feelings after your death.
(11) Revoking a TOD costs as much as creating one. A will can be revoked by tearing up the original and amended by simply signing a new will that contains those changes, or by signing a codicil to the original will. The revocation of a TOD deed must be recorded with the county or through the recording of a later inconsistent TOD deed. Each of these transactions requires not only legal assistance in drafting and executing the documents, but also recording fees with the county and recording of real estate excise affidavits.
(12) Forgotten TOD deeds can screw up estate planning. Estate planning isn't something most people relish doing. Most people are happy to store their plan away and forget it until there is a major life change. When their estate plan is contained in their will, it is easy to pull it up, review their older choices, and make changes. We frequently have client surprised by decisions in their older wills that they forgot they even made, that need to be updated as their lives evolve. If there are major assets, like a house, that have been gifted through a TOD deed, and the client doesn't remember that detail, the old TOD deed will trump any new planning they do, even if they have remarried or had more kids. That means people need to pay much more attention to the details of their planning over the years, which most people would rather avoid.
(13) TOD deeds won't necessarily mean that you don't need to do probate, and doing two processes always costs more than doing one. Remember all those "ifs" above about when probate can be avoided? The reality is that, in most cases, people do end up doing a probate. People have larger accounts without beneficiaries or even just valuable vehicles or possessions that put them over the threshold, even without their real estate. They have unresolved issues with neighbors, businesses, or the IRS that require a personal representative to resolve. They receive money after their death, such as tax refunds or dividend checks, which are most easily redeemed through probate. Their death prompts a wrongful death claim or insurance claim that also requires a personal representative. Conflict can arise among family members or with asset holders. In some cases, the family just wants the ease and security from creditors that comes with going through the formal probate process. For people who have invested in a TOD deed to avoid probate, needing to do one anyway, which happens most of the time, means that they are doing a probate plus a TOD deed administration, which increases their overall expenses beyond what a probate would cost. Even if they avoid a probate, dealing with small estate affidavits, TOD affidavits, and beneficiary claim forms can ultimately take as much, if not more, time and money than just consolidating the whole process into a single probate.
(14) Even if probate is avoided, often no significant money is saved. A TOD deed costs money to draft and record, may cost extra every time you refinance, and will still cost money to administer after you die. Given those expenses and how relatively inexpensive the probate process is in Washington, it is difficult to have any significant money be saved through a TOD deed, even if you were one of the minority of cases that didn't also require a probate. Even if you just need to refinance and rerecord the TOD deed one time, you are probably going to spend every bit as much on those deeds and the affidavits after death as a probate would have cost.
(15) You are signing up to be a guinea pig. While Washington State has allowed TOD deeds since 2014, they are so rare that there are no cases interpreting the state's TOD deed statute. Our firm works on dozens of probates and other estate administrations each year, and we have never had a client come in with a TOD deed. Being an early adopter of new technology can be fun. Being an early adopter of a complex real estate titling instrument isn't as much fun. Right now, each person who executes them is signing up to potentially be the first TOD deed ever interpreted by Washington State courts, with all the uncertainty and complexity that entails. That is part of why many firms, ours included, simply don't offer these deeds to clients. We don't feel like we can realistically give clients a full picture of all the risks and pitfalls with so much still left to be determined. That said, there are some firms that love to be on the cutting edge of new trends that do offer these deeds to clients. If you are sure you want one, we are happy to provide a referral to one of those offices.
Hope this is helpful. Please remember that the above is being provided for informational purposes only and isn't individualized legal advice. It is always best to seek individual advice based on the application of the law to the unique facts and circumstances of each situation. That can only be provided after a consultation with a legal professional familiar with the specific facts of your case. Please also note that all information contained herein applies only to the laws in Washington State.
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