The Minnesota State Bar Association’s Capital Connection recently reported possible legislative action regarding Transfer on Death (TOD) titles for Vehicles in Minnesota. The original bill was ultimately included in an omnibus tax bill (HF3170) on Wednesday, March 24, 2014, according to Capital Connection. If successful, the bill would allow the owner(s) of a car to put another’s name on the title as a “Transfer on Death” (TOD) designation. As you may know, Minnesota already allows this form of transfer for real estate (Transfer-on-Death Deeds or TODD) and for most bank accounts (Payable-on-Death accounts or POD). The bill currently being considered for vehicles would make the transfer exempt from motor vehicle tax. Below is the portion of the original Senate bill (SF1287) that explains the basics:
Subdivision 1. Titled as transfer-on-death. A motor vehicle may be titled in
transfer-on-death or TOD form by including in the certificate of title a designation of a
beneficiary or beneficiaries to whom the motor vehicle must be transferred on death of
the owner or the last survivor of joint owners with rights of survivorship, subject to the
rights of all secured parties.
Some may already be familiar with the Transfer on Death Deed (TODD) for real estate. Some people use these in their estate planning as a way to create a “beneficiary” of sorts for their real estate assets. For those who are considering a TODD for your home or other real estate, or may consider this new TOD for Vehicles if it comes to fruition, let me remind you of a few of things:
- Because a Transfer on Death designation creates a “beneficiary” (in concept) in the person you name on the deed/title, this asset passes outside of the probate process and may avoid some tax ramifications and probate proceedings.
- This TOD designation does NOT provide any ownership interest in the person designated while you are alive. The ownership of the asset passes only upon your death. And, it passes exactly as it is owned by you when you pass away. (This means, for example, if you owe money on the asset, the “beneficiary” receives the asset and the debt.)
- If the asset is jointly owned, ALL parties must pass away before it transfers. So, if you and your spouse own a home jointly and you put your child on the deed as a TOD designation, the home will not pass to your child until you have both passed away.
Transfers on Death (TOD) designations of any asset aren’t for everyone. Talk to an attorney about the Transfer on Death options available to you presently with most bank accounts and real estate – perhaps, soon to include automobiles.This blog is written by Bridget-Michaele Reischl, Attorney DECORO LAW OFFICE, PLLC www.decorolaw.com