Estate planning isn’t just about wills and trusts. Other tools can make the transfer of assets smoother and potentially more cost-effective. One such tool in Colorado is the Transfer on Death Deed. This instrument allows property owners to pass on their real estate without it going through the often complicated and costly probate process.
Though the concept is relatively simple, there are specific legal nuances that both property owners and beneficiaries should be aware of. Knowing the ins and outs of TODDs can ensure a seamless ownership transition without the unnecessary legal hassle.
When should you consider a TODD?
This type of deed could be ideal if you’re looking to pass your property to a loved one without the probate court’s involvement. This is true if you own a single-family home, condominium or any small residential property in Colorado. TODDs aren’t recommended for complex real estate portfolios or properties with multiple owners.
How does it work?
Executing a TODD is straightforward. The property owner signs the deed, which must then be notarized and recorded with the county recorder where the property is located. It’s crucial to note that the deed has no effect until the property owner dies. Until then, the owner retains complete control over the property, including the right to sell it or revoke the TODD.
Always update your estate plan
Even after executing a TODD, keeping your overall estate plan up-to-date is essential. Life changes, such as marriage, divorce or the birth of a child, may necessitate adjustments to your plan. Failing to do so could lead to complications down the line.