In Washington and Idaho, how do you keep your house, or other valuable real estate, out of probate? If you own it jointly with your spouse, as community property, you typically can pass title to your spouse without a probate. However, if you hold title to the property in your name alone or want to pass title (without a probate) to a third party (your children), your two main options are a revocable living trust or a transfer-on-death deed.
Effective June 12, 2014, Washington state adopted legislation (Chapt. 64.80 RCW) allowing individuals to leave their Washington real estate to a third-party, without a probate, by using a transfer-on-death deed. The transfer-on-death deed (solely between married spouses in Idaho) is also now available in more than a dozen states, and others are considering allowing them as well.
A transfer-on-death (TOD) deed, also called a beneficiary deed, which looks much like a regular deed used to transfer real estate. But there’s a crucial difference: It doesn’t take effect until your death. You must record the deed with the county auditor (Washington) before your death, but you are free to change your mind and revoke the deed at any time during your life. You can even list multiple successive beneficiaries on the TOD in the event one of your beneficiaries doesn’t survive the grantor of the TOD.
The TOD is also typically exempt from excise tax (Washington) and, most importantly, you are allowed the stepped-up tax basis that comes when inheriting real property. (Subject to some exceptions, of course as you are dealing with the IRS)!
If you are interested in discussing obtaining a TOD for your Washington or Idaho real property (married couples only) then please feel free to contact my office.