Tearing Down the Wall: How Transfer-on-Death Real-Estate Deeds Challenge the Inter Vivos/Testamentary Divide

53 Pages Posted: 6 Mar 2020

See all articles by Danaya C. Wright

Danaya C. Wright

University of Florida Levin College of Law

Stephanie Emrick

Scruggs, Carmichael & Wershow, P.A.

Date Written: 2019

Abstract

This Article will examine one of the most recent will substitutes, the transfer-on-death (“TOD”) real-estate deed. Nearly half of the states have recognized, through common-law forms or legislation, a mechanism to allow for the transfer of real property on death without using a will, without following the will formalities, and without necessitating probate. This new tool in the estate planner’s toolbox is invaluable: revocable trusts have proven too expensive for decedents of modest means, and wills continue to require formalities that can easily frustrate non-lawyer-drafted estate documents. But the variety of TOD deed rules and mechanisms that the different states have adopted has led to disparity and uncertainty in form and outcome, resulting in litigation and frustration of decedent’s intent.

We believe this uncertainty and frustration will continue as even more states adopt the Uniform Real Property Transfer on Death Act (“URPTODA”), which purports to stabilize the law and facilitate testamentary intent. States grappling with this new form interpose significant differences, and lawyers and judges are not all on the same page as to the consequences. One source of confusion is the URPTODA’s provision that TOD deeds are non-testamentary and, at the same time, the Uniform Act provides that the property rights do not transfer until death.

Although it is one thing to declare that TOD deeds are non-testamentary even though property rights don’t transfer until death—which in itself goes against centuries of formal legal rules—it is quite another to get all the other legal consequences to fall into place accordingly. For instance, would a state’s anti-lapse statute apply to save a beneficiary designation if the deed is deemed non-testamentary, even though the intent is to have the real property transfer upon death?

In our opinion, the TOD deed pushes the juridical binary of inter vivos and testamentary transfers beyond coherence and rationality. The law of will substitutes has already undermined the rationality of maintaining the divide, and in this Article, we will argue that the time has finally come to reject the division between inter vivos and testamentary transfers and seek a rational and holistic set of tools and formalities to gain the benefits of probate avoidance that will substitutes provide with the ease of control and full revocability of wills. Elevating form over functionality, although a characteristic of the common law, inevitably disserves the interests of those who cannot afford lawyers who can easily draft around the sometimes-arcane distinctions between testamentary and inter vivos transfers to gain the benefits of each while avoiding the burdens.

Keywords: transfer-on-death, estate planning, estate taxation

Suggested Citation

Wright, Danaya C. and Emrick, Stephanie, Tearing Down the Wall: How Transfer-on-Death Real-Estate Deeds Challenge the Inter Vivos/Testamentary Divide (2019). 78 Maryland Law Review 511; University of Florida Levin College of Law Research Paper No. 20-8. Available at SSRN: https://ssrn.com/abstract=3548859 or http://dx.doi.org/10.2139/ssrn.3548859

Danaya C. Wright (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States
352-273-0946 (Phone)
352-392-3005 (Fax)

Stephanie Emrick

Scruggs, Carmichael & Wershow, P.A. ( email )

No Address Available
United States

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