Understanding Transfer on Death Deeds: Tax Implications and Estate Considerations

In the realm of estate planning, one tool that has gained significant traction in recent years is the Transfer on Death (TOD) deed. This legal instrument allows individuals to transfer real estate to designated beneficiaries upon their death without the need for probate.

What is a Transfer on Death Deed?

A Transfer on Death deed, also known as a beneficiary deed or a TOD deed, is a legal document that enables property owners to designate beneficiaries who will inherit their real estate upon their death. Unlike traditional wills, TOD deeds bypass the probate process, thereby providing a streamlined method for transferring real property.

Tax Implications of Transfer on Death Deeds

One of the primary advantages of TOD deeds is their ability to facilitate the transfer of property outside of probate, which can be time-consuming and costly. However, it's essential to understand the tax implications associated with this estate planning tool.

Capital Gains Tax:

One significant consideration is the potential impact on capital gains tax. When property is transferred through a TOD deed, the beneficiary receives a "stepped-up" basis, meaning the property's value is reset to its fair market value at the time of the owner's death. This adjustment can minimize the capital gains tax liability for the beneficiary if they choose to sell the property in the future.

Inheritance Tax:

In most cases, inheritance tax is not applicable to property transferred via TOD deeds. However, it's crucial to consult with a tax professional to understand the specific tax laws and regulations in your jurisdiction.

Estate Administration and Creditor Claims

While TOD deeds offer a streamlined method for transferring real estate, it's essential to recognize that they do not completely eliminate the need for estate administration. In some cases, opening an estate may still be necessary to address outstanding creditor claims and other administrative matters.

Creditor Claims:

Even if property is transferred through a TOD deed, creditors may still have valid claims against the deceased's estate. Opening an estate allows creditors to make claims against the estate's assets, including the property transferred via TOD deed. By going through the probate process, creditors are provided with a specified timeframe to assert their claims, offering clarity and protection for beneficiaries.

Conclusion

Transfer on Death deeds can be valuable estate planning tools, offering a straightforward method for transferring real estate to designated beneficiaries. However, it's essential to understand the tax implications associated with TOD deeds, including capital gains tax considerations. Additionally, while TOD deeds can streamline the transfer process, they may not fully negate the need for estate administration, particularly concerning creditor claims.

Jury Issue of Interest in Mississippi

 This case looks like a potential problem waiting to happen.  

City of Picayune v. Landry Lewis Germany Architects, P.A., 2022-CA-00909-SCT (Civil - Torts - MTCA)
Reversing a judgment against the City based on a claim that the City failed to volunteer information about a juror during voir dire in a civil trial to which the City was a party, holding: "A party litigant has no duty to party opposite to personally intervene during a trial to prevent a fraud on the court by a potential juror."
(9-0)

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Expunging A DUI in Mississippi

Under certain circumstances a DUI may be expunged in Mississippi.   Under 63-11-30 the requirements are below: 

 (13)Expunction.

(a) Any person convicted under subsection (2) or (3) of this section of a first offense of driving under the influence and who was not the holder of a commercial driver's license or a commercial learning permit at the time of the offense may petition the circuit court of the county in which the conviction was had for an order to expunge the record of the conviction at least five (5) years after successful completion of all terms and conditions of the sentence imposed for the conviction. Expunction under this subsection will only be available to a person:

(i) Who has successfully completed all terms and conditions of the sentence imposed for the conviction;

(ii) Who did not refuse to submit to a test of his blood or breath;

(iii) Whose blood alcohol concentration tested below sixteen one-hundredths percent (.16%) if test results are available;

(iv) Who has not been convicted of and does not have pending any other offense of driving under the influence;

(v) Who has provided the court with justification as to why the conviction should be expunged; and

(vi) Who has not previously had a nonadjudication or expunction of a violation of this section.

(b) A person is eligible for only one (1) expunction under this subsection, and the Department of Public Safety shall maintain a permanent confidential registry of all cases of expunction under this subsection for the sole purpose of determining a person's eligibility for expunction, for nonadjudication, or as a first offender under this section.

(c) The court in its order of expunction shall state in writing the justification for which the expunction was granted and forward the order to the Department of Public Safety within five (5) days of the entry of the order.

Four situations in which an executor or administrator may petition the court for an order authorizing the sale of real property in Mississippi

 

There are four situations in which an executor or administrator may petition the court for an order authorizing the sale of real property:

pursuant to Miss. Code Ann. § 91-7-187 authorizing the sale of land, with due consideration given to the interests of the distributees, in preference to the personal property;

pursuant to Miss. Code Ann. § 91-7-189 authorizing the sale of land if a decedent had purchased land prior to his death and died before completing payment for it and the decedent’s personal property is not sufficient to pay the debt;

pursuant to Miss. Code Ann. § 91-7-191, if the executor or administrator determines that the personal property will not be sufficient to pay the debts and expenses of the estate; and

pursuant to Miss. Code Ann. § 91-7-261, if the executor or administrator determines that both the real and personal property will be insufficient to pay the debts of the estate.

Random Mississippi Statute of Interest

 

Chapter 17 - Suits to Confirm Title or Interest and to Remove Clouds on Title
§ 11-17-35. Title of complainant must be deraigned-and decrees, in certain cases, recorded as deeds

Universal Citation: MS Code § 11-17-35 (2020)

In bills to confirm title to real estate, and to cancel and remove clouds therefrom, the complainant must set forth in plain and concise language the deraignment of his title. If title has passed out of the sovereign more than seventy-five (75) years prior to the filing of the bill, then the deraignment shall be sufficient if it show title out of the sovereign and a deraignment of title for not less than sixty (60) years prior to the filing of the bill. A mere statement therein that complainant is the real owner of the land shall be insufficient, unless good and valid reason be given why he does not deraign his title. In all such cases, final decrees in the complainant's favor shall be recorded in the record of deeds, and shall be indexed as if a conveyance of the land from the defendant or each of them, if more than one, to the complainant or complainants, if more than one.