Your estate plan establishes your legacy and ensures that the right people receive your property when you die. Typically, testators creating wills and other estate documents focus on their biggest assets first.
Few pieces of personal property will have the financial or emotional significance that your home does. There are many ways to handle real estate in your estate plan. Some people put it in a trust. Others instruct their executor to sell their home.
Still others include a transfer-on-death deed, which is a kind of document that Colorado permits. Should you use a deed to transfer your home?
Transfer-on-death deeds offer both drawbacks and benefits
There are a few risks with creating a transfer-on-death deed as part of your estate plan. One is that the recipient could misplace the deed, making it much more difficult to transfer the property after your death. Another is that you may change your decision about the property, which could lead to a difficult conversation is a person who thought they would receive it.
The benefits of a transfer-on-death deed are obvious. The people in your family will already know what will happen with your home after you die, so there won’t be any surprise or disappointment that leads to a probate challenge.
Further, the home won’t have to go through probate like it otherwise would, which offers numerous benefits. The recipient can take possession much more quickly. The estate will also be at less risk of estate taxes, as real estate could push it over the threshold for exemption.
Drafting a transfer-on-death deed can be a viable solution for handling your real estate as you create your Colorado estate plan.