Dirt, Death, and a Possible Additional Way to Make a Planned Gift

I just returned from Spokane, where I attended my state bar association’s annual seminar for attorneys who practice real estate, probate, and/or trust law. In decades past, any given lawyer might work in all three of these areas (as well as in many other areas), and even today – especially in smaller communities – a few still do.

In more modern times, however, most attorneys who attend the seminar devote themselves either strictly to real estate matters or strictly to probate matters, trust law, and other aspects of estate planning and administration. In short, you’re either a dirt lawyer or a death lawyer. Consequentially, each year the seminar runs mostly on two different tracks, with only a handful of plenary sessions.

This year, one of the plenary sessions really caught my attention. It focused on the Uniform Real Property Transfer on Death Act (“the Act”) promulgated in 2009 by the National Conference of Commissioners on Uniform State Laws (“NCCUSL”). The notion reflected in the Act is that during life, an individual deeds a piece of real estate to another individual or to a charity (or to some combination of individuals and/or charities), with the deed taking effect only upon death.

Because the deed can be revoked or amended or the property transferred in some separate manner during life, a gift of real estate made to a charity by means of such a deed is different from a retained life estate, an arrangement with which gift planners have long been familiar.  Moreover, transfers on death are not limited to personal residences and farms.

Even before NCCUSL came out with the Act, 13 states – most of them west of the Mississippi – permitted some sort of transfer-on-death deed. Since promulgation of the Act, six states (again, primarily western states) have adopted the Act, with one of those states, Nevada, replacing its 2003 law with the Act.

As a result, many gift planners may already know about and use the transfer on death option.  Of course, as with all matters involving real estate, the applicable law is that of the state where the property is located, which may not be the state where the charity a donor wants to benefit is located (or even the state where the donor himself of herself lives).

In the coming years, many more states – including mine – can be expected to consider the Act and then likely adopt it. As with all “uniform” laws, specific provisions will typically vary somewhat from state to state. Indeed, there can be any number of details that come into play when a donor uses a transfer-on-death deed to make a gift of real estate to a charity, and any particular detail may be addressed in different ways by different states.

For many reasons, a transfer-on-death deed is an attractive way to make a charitable gift, both from the point of view of donors and from that of charities. As legislatures take up the Act, gift planners in the states in question should be actively involved in making sure that whatever is adopted will do as much as possible to facilitate the overall process of donors using transfer-on-death deeds to make charitable gifts in the right circumstances.