TOD vs. living trust for real estate

[Amy Chan]

What is the name of your state (only U.S. law)? Nevada

Are assets in a living trust or assets with TOD designations more "protected" from future changes in legislation?

I am in the process of purchasing a new home and wondering whether to make a TOD deed or put it in my living trust.

 

[adjusterjack]

What is the name of your state (only U.S. law)? Nevada

Are assets in a living trust or assets with TOD designations more "protected" from future changes in legislation?

"Future changes in legislation" could mean anything. There's no way to predict them so there's no way of answering that question.

I am in the process of purchasing a new home and wondering whether to make a TOD deed or put it in my living trust.

Sorry, but no one can advise you on that either. Presumably you had a reason for the living trust when you made it. That might or might not still be appropriate based on ALL of your individual circumstances, like what's already in it, why you made, how much you are worth, who you want to leave stuff to, etc.

The big advantage of TOD is that you can set one up for just the cost of recording the document and the format is already in the statute. Another advantage is that the transfer of ownership is automatic. Your beneficiary need not do anything and doesn't have to wait for trust administrators to distribute assets. You can revoke or change the TOD at any time without incurring any cost, other than recording fee, or hassle.

Even if you choose TOD for your home you might still need the living trust for other things, or not. It's something you have to figure out for yourself.

 

[curb]

The TOD is really clean. I would do it for every asset that is eligible. But the living trust can be made very simple for distribution depending on who is the trustee. I cleared/distributed my father's trust (no debt, four pieces of real estate and two bank accounts) in less than a week with zero problems. To do this you need all beneficiaries "on the same page".

 

[TrustUser]

you might want to ask yourself these 2 questions.

1) do you want to keep this property protected for your beneficiaries, such that they can earn income from the property ?

2) are there multiple beneficiaries, or just one ?

many people are not aware of some of the things that trusts are capable of doing, so can not make a truly informed decision.

 

[FlyingRon]

TOD is clean if you have a static beneficiary. It can't provide for contingent transfers if the beneficiary predeceases you, etc...

 

[curb]

" if the beneficiary predeceases you" it is easier to change the beneficiary on a TOD than changing a beneficiary on a trust. As with any document, the holder/owner of the account needs to pay attention. And yes, it is important to designate a contingent beneficiary in the case a primary beneficiary dies.

 

[adjusterjack]

it is important to designate a contingent beneficiary in the case a primary beneficiary dies.

Yes, I was able to do that on my TOD deed in AZ.

One would have to check the statutory formats of other states to see if that is allowed.

 

[TrustUser]

the death of a beneficiary in a trust often needs nothing done to it at all

that is often taken care of when the trust is made - it sure should be

i knew that california had enabled tods a year or so ago, so i looked it up

i was a bit surprised in that at least in california, it is not a grantor deed

it does not have a grantor grants to grantee clause

it simply uses a parcel number, and allows you to fill in your beneficiaries

it is revocable, but it is also like a will, in the sense that the last one recorded is the one that is used

so if i have a grantor deed on PROPERTY A, i can record a revocable tod today

and if i change my mind in the future, i simply record another revocable tod

i am a big fan of keeping things in trust, protected from the creditors of the beneficiaries

and within a trust, there is usually a clearer path as to what needs to be done

if owned by more than one individual, there can be disagreements and holdups, if one wants to sell and the other does not