10.30.09
ToD Me
Have you ever heard of “ToD” or its brother, “PoD”? They mean “Transfer on Death” and “Payable on Death.” They’re basically beneficiary designations that you can attach to all sorts of investment properties. You, for instance, can set up your savings account the following way: “Your Name, PoD Your Daughter.” Upon your death, your daughter would receive the savings account, as though she were a joint owner (read: without probate), but while you’re alive, she has no rights over it (which has many benefits: prevents fraud, precludes estranged spouses from trying to claim it in a divorce, no bankruptcy problems if the daughter files Chapter 7, etc.).
The procedure has one major drawback: It doesn’t apply to real estate. Therefore, the only way to avoid probate with real estate is to put your offspring on the real estate title as a joint owner (which has many risks) or put the real estate into a trust.
But that’s changing. Effective July 1, 2009, Indiana enacted legislation that allows people to transfer real estate into a ToD designation, as long as you follow the statutory requirements. If you do so, your heir will receive the real estate without the need for probate.
This a huge development for Indiana estate planning. Michigan is supposedly considering similar legislation. We’ll keep you posted.
