Traditionally, real estate must pass through a deed signed by all grantees of the last vesting deed, or if one of the grantees has passed away, then a probate proceeding allows a court to transfer title for the deceased grantee. The probate process can be time-consuming and frustrating as the court reviews the assets, settles any debts, and decides how to distribute the remaining assets to heirs.

To streamline this process, Washington State has adopted the Uniform Real Property Transfer on Death Act. This law allows for the transfer of title to your real estate on death to your designated beneficiaries while avoiding the costs and delays of probate using what is called a “transfer on death deed.”

With a transfer on death deed, the property owner, called the transferor, can record a completed transfer on death deed designating the transferor’s beneficiaries, which tells the county recorder’s office to transfer the real property to the designated beneficiaries on presentation of the transferor’s death as an inheritance outside probate and without real estate excise tax under WAC 458-61A-202.

The transfer must meet three requirements: the transferor must be of sound mind, the transfer must include all information that a regular deed would include, and it must be signed and notarized. After meeting these requirements, you must then file the transfer on death deed with the auditor or recorder of the county where the property is located for it to be valid. The property will transfer when the transferor’s death certificate is recorded.

Another benefit is that the transfer on death deed does not otherwise affect title during the transferor’s lifetime. This means that it will not trigger your mortgage’s due on sale clause, if you have one. This also means that the transfer on death deed will have no effect on the surviving joint owner or owners with right of survivorship, but only takes effect on the last surviving joint owner’s passing.

Here are three other reasons to consider adding a transfer on death deed to your estate planning strategy.

To gain flexibility in beneficiary designation

Property owners can designate specific individuals, multiple beneficiaries, or even organizations as recipients of the property. If one of these beneficiaries dies, they are simply removed from the beneficiaries listed on the transfer on death deed, and the remaining beneficiaries take equal shares of the property. You can also list alternate beneficiaries in case your intended primary beneficiary cannot take control of the property at your death. This flexibility allows for customization based on your family dynamics and estate planning goals, ensuring that your property is distributed according to your wishes.

Note that if the transferee is no longer alive when the transferor dies and the deed does not name a successor or alternate transferee, the property will return to the transferor’s estate.

To retain control of your property during your lifetime

Even after you designate beneficiaries in a transfer on death deed, you still retain full control over your real estate during your lifetime. It does not affect title or the interests of your secured creditors, and therefore does not constrain your ability to sell, mortgage, or transfer the property as you see fit during your lifetime. You can also revoke the deed if need be. Further, the transfer on death deed does not create a legal or equitable interest in the real estate in favor of the designated beneficiary. This flexibility ensures that you can adapt to life’s changing circumstances without compromising your estate plan.

To reduce costs

Transfer on death deeds offer a cost-effective alternative to traditional estate planning vehicles. For example, by avoiding probate, you can save on court fees, legal expenses, and other associated costs. As of January 1, 2024, Washington counties will charge $303.50, plus $1 for each additional page to record a transfer on death deed, and will charge $18, plus $1 for each additional page to record the death certificate. These fees are subject to change. Also, remember that each person on title needs to complete their own transfer on death deed to affect their interest in the real property on their death. This makes transfer on death deeds an attractive option if you want a more economical way to approach estate planning in Washington than the costs associated with creating living trusts and transferring title to property into the trust.

The inheritance of the property transferred by the transfer on death deed is also not taxable to the beneficiary by the IRS, though your estate may still be subject to an estate tax or debts that you owe when you die, and even then. It is also exempt from Washington’s real estate excise tax because it is considered an inheritance.

Learn more about the benefits of transfer on death deeds in Washington

The benefits of transfer on death deeds in Washington extend beyond mere convenience. They offer a strategic, efficient means of managing real property transfer while minimizing the complexities and costs associated with probate.

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