TRANSFER-ON-DEATH DEEDS: THE SAME, BUT VERY DIFFERENT
Considerations for property owners in Georgia
Effective July 1, 2024, Georgia property owners have a new option available to them as far as how they hold title to their property, the Transfer on Death Deed (O.C.G.A. § 44-17-1, et seq.). This is a new option in Georgia, and has, naturally, caused some confusion.
Basically, a Transfer-on-Death Deed allows a property owner to choose/name a beneficiary to receive the property after the owner’s death. This only takes effect if the owner dies. While the property owner is alive, only the owner is treated as the legal and equitable owner of the property. Ownership does not pass to the chosen beneficiary until the death of the record owner. Even once the owner dies, though, the beneficiary takes their ownership of the property subject to any liens or other validly recorded interests in the property that are of in place prior to the original owner’s death.
Also, as with so many things in real estate and law, nothing is automatic. After the original owner’s death, the chosen beneficiary has to take certain steps in order to accept the property. Specifically, that beneficiary must prepare and sign an affidavit confirming the original owner’s death, stating whether the original owner and the chosen beneficiary were married at the time of the original owner’s death, and providing a legal description of the property. Additionally a redacted copy of the original owner’s death certificate must be attached to the Affidavit. The affidavit must be recorded in the deed records within 9 months of the owner’s death or the beneficiary’s interest in the property will revert to the original owner’s estate.
Additionally, being the “designated” beneficiary or successor is not a secure position. The original owner may revoke or change the designation of a beneficiary at any time while they are alive. This revocation must be done by recording in the deed records a properly signed, witnessed and notarized revocation. If the original owner decides to sell the property (which they are allowed to do) the revocation would be necessary for any sale of the property and likely for any refinance of the property. Even if the owner doesn’t want to simply revoke the gift to the chosen beneficiary, they are allowed to change who they have “picked.” A change in beneficiary would be accomplished by recording a new Transfer-on-Death deed in the deed records, and any new Transfer-on-Death deed would revoke any prior Transfer-on-Death deed.
When utilizing this new form of ownership, keep in mind that there may be impacts outside of the question of who owns the property. For example, the County Tax Office may change tax exemptions as a result of the filing of the deed. The deed shouldn’t trigger such change, since the grantor retains all right, title, and interest in the property up until the grantor’s death, however, the filing of a deed may cause some automatic changes in the record, and the owner will need to be proactive in monitoring the tax assessor and or tax commissioners treatment of the property and the exemptions after the recording of the deed, and may need to request corrections by such tax offices. Additionally, there will be questions (to be addressed with an accountant) about the stepped-up basis that typically applies for inherited property will also apply for property taken via a transfer-on-death deed. There may be issues that arise with regard to Medicare liens (and some other liens) which should be addressed prior to using these deeds in your estate planning. Also, if you are considering a transfer-on-death deed in order to “avoid probate,” keep in mind that the new law is silent as to any interplay with probate statutes, including the right of spouses or children to claim property as years’ support, and also as to the priority of any such interest as against creditors or others with claims raised against the original owner.
The “big picture” sounds nice; the owner keeps the property, and their “chosen person,” gets it when they die. As always, though, the devil is in the details. Keep in mind that a similar outcome, “my chosen person gets the property when I die,” can also be accomplished several other ways, including survivorship deeds, life estates, and a last will and testament.
If you have questions about the differences, and want to discuss options that might make sense for your specific circumstances, please feel free to contact us. We’re always happy to meet with you at our Gainesville, Georgia office, or we can set up a phone call, whichever you prefer.