Alaska Joins Growing Number of States That Recognize Transfer on Death Deeds

Alaska is the latest state to recognize deeds that transfer ownership of real estate after death without the need for probate.

Dubbed “transfer on death deeds” (or “TOD deeds” for short) in some states, or “beneficiary deeds” in others, the list of U.S. jurisdictions that accept this type of deed through state legislation has grown to 25:

  1. Alaska
  2. Arizona
  3. Arkansas
  4. Colorado
  5. District of Columbia
  6. Hawaii
  7. Illinois
  8. Indiana
  9. Kansas
  10. Minnesota
  11. Missouri
  12. Montana
  13. Nebraska
  14. Nevada
  15. New Mexico
  16. North Dakota
  17. Ohio
  18. Oklahoma
  19. Oregon
  20. South Dakota
  21. Virginia
  22. Washington
  23. West Virginia
  24. Wisconsin
  25. Wyoming

Aside from this, three states – Florida, Michigan, and Texas – recognize “enhanced life estate deeds,” also known as “Lady Bird deeds,” under state common law, which in essence accomplish the same thing as TOD deeds.

How Does a TOD Deed Work?

How does a TOD deed work?  While the logistics vary from state to state, in general the owner of the real estate will sign a new deed which lists the beneficiaries who will inherit the property after the owner dies.  The new deed is then recorded in the applicable public land records (this is usually done at the court house of the county where the real estate is located and costs between $10 and $50).  Then, after the owner dies, their death certificate is recorded in those same public land records, and voilà, the beneficiaries named in the deed become the new owners of the property.

What happens if the owner decides they want to change the beneficiaries of the property after the new deed is recorded?  Then the owner will have to sign and record another TOD deed.

Is a TOD Deed Right for You and Your Family?

While the use of a TOD deed to avoid probate may appear to be a simple process, it is certainly not a “one-size-fits-all” solution to avoid probate and it is certainly not something you should attempt to do on your own because there are so many things that can go wrong.

If you are interested in using a TOD type of deed to avoid probate of your real estate after you die, then consult with an estate planning attorney in the state where your real estate is located to determine if this is the right solution for you and your family.

Photo: Aerial view of Aghileen Pinnacles, Lefthand Valley, Wilderness Area, Alaska; U.S. Fish and Wildlife Service

Writer Tom Clancy’s Will Demonstrates Clear and Present Danger of Estate Planning for a Blended Family


OK, I admit it.  Back in the day I read all the Tom Clancy novels – The Hunt for Red October, Red Storm Rising, Patriot Games, Clear and Present Danger, The Sum of All Fears – and saw all the movies (and yes, I read the books before I watched the movies).  How else would I have learned about Russian MiG 29s,  U.S. F-14 Tomcats, CENTCOM, and PACOM?  But while Mr. Clancy’s stories were full of international espionage and meticulously detailed military information, unfortunately his last will and testament and particularly his second codicil, drafted by a Baltimore estate planning attorney, lacked the precision of his own writing.

Mr. Clancy died from heart failure on October 1, 2013, at the age of 66.  He left behind his wife, Alexandra Clancy, a young daughter, and four adult children from his first marriage.

Mr. Clancy’s will and two codicils were filed for probate in Baltimore City, Maryland, on October 10, 2013.  The probate docket indicates that the author signed his 21-page will on June 11, 2007, and two short codicils totaling a mere three pages on September 18, 2007 and July 25, 2013.

According to a partial estate inventory filed in January 2014 and a supplemental inventory filed in September 2014, Mr. Clancy’s estate is estimated to be worth $83 million.  His largest asset was a 12% ownership interest in MLB’s Baltimore Orioles, estimated to be worth $65 million; he also had multiple real estate holdings (including a $7 million estate overlooking the Chesapeake Bay which went to his wife through joint ownership), $10 million in business interests, and, while it may seem odd it’s certainly not unexpected, a rare, operating World War II tank.

While several of the real estate holdings passed to Mr. Clancy’s wife through joint ownership with rights of survivorship (along with other jointly held investments which are not part of the probate estate), Mr. Clancy’s intent for the remainder of his property was for it to be divided among three distinct trust “buckets”:

  1. One-third in a marital trust for the benefit of his wife;
  2. One-third in a  family trust for the benefit of his wife and all his children; and,
  3. The balance in trusts for the benefit of his four adult children as well as grandchildren.

This sounds like a reasonable plan for the author’s blended family, doesn’t it?

But lurking in this type of plan for a blended family and a substantial $83 million estate is the impact of estate taxes – both federal and Maryland (when Mr. Clancy died, the federal estate tax exemption was $5.25 million and the Maryland estate tax exemption was a measly $1 million).  The total estate tax bill is estimated to be $16 million, and the Personal Representative of the estate, Baltimore estate planning attorney J.W. Webb (who drafted the July 2013 codicil – more on that below), has taken the position that trust bucket #2 (the family trust) should pay $6 million of the tax bill and trust bucket #3 (the children’s trusts) should pay $10 million of the tax bill (note that trust bucket #1, the marital trust, is designed to defer payment of estate taxes on its value until after Alexandra Clancy’s death).  But according to the “Petition for Declaratory Judgment, Construction of Will, and Removal of Personal Representative” filed in early September by Alexandra Clancy’s attorneys, the widow believes that the intent of the July 2013 codicil was to confirm that trust bucket #3 – the trusts for the benefit of Mr. Clancy’s four children from his first marriage – should pay the entire $16 million estate tax bill, thereby leaving trust bucket #2 completely intact.  Mr. Webb has so far declined to comment on the petition and has until October 17 to file his response.

International intrigue?  Not even close, just a typical day in probate court, and yet another example of celebrity estate planning gone wrong.  In addition to the questionable language in the July 2013 codicil, had Mr. Clancy created and funded a revocable living trust instead of relying on a will and some codicils as the governing documents of his estate plan, then the intimate details of the writer’s final wishes would have remained a private family matter.  In fact, this surprised me since 10 years ago I practiced as an estate planning attorney in Bethesda, Maryland, and my firm was (and still is) a firm believer in revocable living trusts.  And since this was (and still is) the case for other Maryland estate planning firms, why an estate planning attorney with a big Baltimore firm would use a will instead of a trust is beyond me.

Aside from this, the Clancy estate battle also demonstrates how tricky it is to plan for a blended family.  What was the author’s true intent?  Unfortunately we will never know, and after significant time and money have been spent, a probate judge will end up making the final decision.

Keeping Your Estate Plan Private – A Lesson From Buffalo Bills Owner Ralph Wilson

It appears that Buffalo Bills owner Ralph C. Wilson, Jr. did his estate plan right because the public doesn’t have a clue about Mr. Wilson’s final wishes regarding the future of his football team.

Mr. Wilson, a long time resident of Detroit, died in March 2014 and just last month his last will and testament was filed for probate in Wayne County, Michigan.  Since wills are public court records, several reporters were quick to snatch up a copy of the will.  But much to their dismay, the will reveals very little about the late NFL owner’s estate because the will is a short “pour over will.”

A pour over will is a simple type of will that is used in conjunction with a revocable living trust.  It states that anything not transferred into the name of the revocable living trust prior to death gets “poured over” into the trust after death.  So it is the revocable living trust, not the pour over will, which spells out all of the details about who will get what and when they will get it.  And since revocable living trusts are private documents that only those mentioned in the trust – beneficiaries, trustees and their respective legal and tax representatives – are allowed to read, the public is left in the dark about all of the intimate details of the trustmaker’s final wishes.

Buffalo Bills fans were hoping that the filing of Mr. Wilson’s will for probate would give them a clue about the fate of their beloved team.  But even though multiple bids have been received for purchase of the Bills, including offers from Donald Trump, Terry Pegula (owner of NHL’s Buffalo Sabres), and a group headed by rock star Jon Bon Jovi, Mr. Wilson’s will does not reveal if those bidding must agree to keep the team in Buffalo.  Of course this is something that Mr. Wilson clearly wanted and may have included in his revocable living trust, but only the beneficiaries and trustees of the trust know for sure.  Having been born and raised in Pittsburgh I’m of course a lifelong Steelers fan, so I can certainly feel for Bills fans – if the Steelers ever left Pittsburgh it would be a catastrophe – and I’m actually pulling for the Bills to stay in Buffalo too.  But in the end money may talk and the team may walk and Bills fans won’t know for sure until after the deal is done.

What estate planning lesson can be learned from this situation?  Let’s contrast Mr. Wilson’s smart trust planning against the very public wills of actors James Gandolfini and Philip Seymour Hoffman.  In the latter two cases the public has been allowed to take a very close look at each actor’s final – and in both cases unusual – wishes and how much each beneficiary will get and when they will get it.  That’s the real beauty of using a revocable living trust and not a will as the governing document of your estate plan – it keeps all of the intimate details of your final wishes confidential.

Photo:  Bills Steelers joint training camp, August 14, 2014, Latrobe, PA

Beware: Joint and POD Accounts Can Ruin Your Estate Plan

While accounts or real estate titled jointly with your children or other beneficiaries or made payable on death (POD) to your children or other beneficiaries will avoid probate after you die, they may end up creating problems that cannot be easily undone.

For example, if you have three children but only one of them is listed as a joint owner on your bank account or real estate, then the child listed on the account or deed will inherit the entire account or property after you die to the exclusion of your other two children.  This means that the child who inherits the account or real estate will have absolutely no obligation to share the property with his or her siblings and, worse yet, even if the child agrees to share, then the child will be making taxable gifts to your other children.  Keep in mind that this will happen even if your will or trust states that  all of your property is to go equally to all three of your children.

Here’s another problem with joint accounts – what will happen if the child listed on your bank account or deed is married and gets divorced or gets sued?  Then it’s possible that some or even all of the property could become subject to a divorce settlement or judgment lien, thereby wiping out the bank account or tying up the real estate when you decide to sell it.

And here’s a problem with POD accounts – what if you name a grandchild as the POD beneficiary of your bank account or real estate and the grandchild is still a minor when you die?  Then a costly, court-supervised guardianship or conservatorship will need to be set up for the grandchild which will remain in place until he or she reaches 18, at which time the grandchild will receive the property outright and without any strings attached.

And finally, one last POD problem – what if you name all three of your children as POD beneficiaries of your bank account or real estate and one of your children predeceases you and you never update the POD designation or deed?  Then your two surviving children will inherit the property to the exclusion of the children of your predeceased child (your grandchildren).

These are only a few examples of how joint accounts and POD designations can ruin your ultimate estate planning goals.  The only way to insure that all of your property will pass to all of your intended beneficiaries in the way you expect it to pass is make sure the ownership of your accounts is coordinated with your will or trust.