Star-Advertiser: ‘Transfer on Death Deed’ (11/6/15, 11/12/15)

Updated 11/12/15
An attorney can help draft a ‘Transfer on Death Deed’

By Christine Donnelly
Kokua Line, Star- Advertiser, 6 Nov. 2015

Question: A new Hawaii law (Act 173) was enacted in July 2011 allowing homeowners to transfer a property (i.e., house) to their beneficiaries using a “Transfer on Death Deed.” Such a transfer, using this document, avoids a lengthy probate and high cost. Does the state of Hawaii have this form? If not, where can we get this form?

Answer: No, the state of Hawaii does not issue standard real-estate deed forms, said Nicki Ann Thompson, registrar of the Bureau of Conveyances, which is the division of the state Department of Land and Natural Resources that records titles to real property statewide.

She suggested that you hire a knowledgeable real-estate attorney, estate planner, business adviser or other qualified expert to draft this important document. That way the deed, which must be recorded before your death in order to be valid, will meet your specific needs, as well as the legal requirements of Hawaii’s Uniform Real Property Transfer on Death Act, which, as you noted, took effect in 2011 as Act 173.

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Senator Shimabukuro introduced this bill, SB105. For more on this act, see How to Pass Your Home On to Your Heirs Affordably and Update Re: Bill Introduced by Sen. Shimabukuro (SB105).
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The law allows a real property owner “to designate beneficiaries to receive real property upon death of owner without requirements of probate or formalities of wills,” according to the bill summary at the time the legislation passed. 

Before its passage, there were three primary methods to transfer real estate in Hawaii upon the death of the owner: probate; titling and tenancy; and revocable trusts, according to the 2014 report “Estate Planning: Hawaii Real Property Issues and Techniques.”

Act 173 ushered in another option, the “Transfer on Death Deed,” which the report described as the real-estate equivalent of a “payable on death” bank account, where the beneficiary is named in the event of the death of the account holder.

The report spells out the pros and cons of the approach, as well as some of the major requirements of crafting and recording a valid deed. You can read the full report at 808ne.ws/1MmzTMQ.

An experienced professional can advise whether the TODD is the best way to preserve your assets for your designated heirs. The Hawaii State Bar Association can help you find a qualified lawyer, if you go that route. Go to the organization’s website at hsba.org, click on “For the Public,” then, in the pull-down menu that appears, click on “Find a Lawyer.”

If you have already read up on the law and are committed to drafting the document yourself, you might try searching online, using the terms “Transfer on Death Deed,” “Hawaii” and “form.” A number of legal websites should pop up, promising that a TODD template is available to download, for a fee. We can’t vouch for any specific website, and suggest that you vet the company carefully before going the do-it-yourself route.

Read the full article on the Star-Advertiser site.

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UPDATE 11/12/15
Refile for home exemption if transferring title to trust
By Christine Donnelly
Star-Advertiser, Kokua Line, Nov 11, 2015

Question: The information about “Transfer on Death Deeds” (808ne.ws/1MVCa3A) was interesting, but we’re thinking about a trust. If we transfer title of our house to the trust, should we reapply for the home exemption?

Answer: Yes, according to the website for the Real Property Assessment Division of the city Department of Budget and Fiscal Services.

“For changes in ownership or use of your property, it is required that you refile your exemption. Depending on how your trust is named, there may be questions as to your qualification for exemption. To minimize any questions we might have, it is best that you send in a copy of your trust when you file your exemption,” according to the division’s FAQ, which addresses a similar question about transferring property into a trust.

Make sure that the trust is written so that it preserves your eligibility for this valuable exemption, which discounts the assessed value of an Oahu home in which an owner resides so that owner-occupants may pay less in real estate taxes.

The basic home exemption is $80,000 for homeowners under 65 and $120,000 for those 65 years and older, according to the website. The applicable amount is deducted from the assessed value of the property, and the homeowner is taxed on the balance.

You can read more on the subject at realproperty honolulu.com.

Read the full article on the Star-Advertiser site.

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