July 2009 "New Indiana Transfer on Death Act Arrives"

PLANNING FOR WEALTH & SECURITY
By attorneys Jennifer & Jeff Hawkins

New Indiana Transfer on Death Act Arrives

The Indiana’s new Transfer on Death Property Act offers radically new opportunities for people to transfer wealth after July 1, 2009. Hoosier can now own land, vehicles, and the contents of their junk drawers with some of the same simple account ownership styles that banks and investment companies offer.

Banks and investment firms have offers “TOD” (transfer on death) and “POD” (pay on death) account designations for decades. The TOD account owner designates beneficiaries to “inherit” the account after the account owner dies. The owner can change the TOD beneficiaries at any time, and the TOD beneficiaries have no ownership rights in the account during the owner’s life. The old TOD and POD statutes were very simple and provided few protections for beneficiaries when unusual circumstances arose. Despite the limitations, the old statutes made it very easy for people to set up bank and investment accounts to pass wealth to beneficiaries.

The Indiana Legislature expanded the transfer on death laws in 2008 to allow people to order vehicle titles with the TOD designation. Like the old TOD account statutes, 2008 statute was very limited. At the time that the Legislature proposed TOD legislation for real estate and vehicles titles, but the Indiana State Bar Association persuaded the legislature to drop the issue with respect to real estate so that the Association could compose a more complete statute. An Indiana State Bar Association committee staffed by Chairman Jim Martin of Merrillville; Suzanne Katt of Indianapolis; and Jeff Hawkins of Sullivan teamed up to write the 20 plus page legislative behemoth earlier this year.

The new Transfer on Death Property Act, effective July 1, 2009, repeals all of the old statutes relating to TOD and POD bank accounts, investments, and vehicle titles, and replaces those statutes with a single, comprehensive statute. The law covers all of those topics, plus real estate, and every other kind of asset. For example, a person may now set up ownership of farmland, machinery, and artwork with a TOD designation so that beneficiaries will receive ownership of those assets without using a will or other estate planning device.

The Transfer on Death Property Act does replace the need for wills and trusts, but owners can manage some assets effectively with TOD designations. Hawkins Law PC uses TOD designations to channel assets through wills and trusts with less complexity and expense than was required before the Transfer on Death Property Act was established.

The new act does not specify how TOD designations should be made or offer forms to accomplish the structure. It is illegal for anyone other than a licensed Indiana attorney to set up a transfer on death deed to transfer real estate for another person. A person may set up TOD bank and investment accounts by consulting their bankers and investment advisors, but it is advisable to consult an attorney who has knowledge and experience with the Act so the TOD designations can be set up properly.

THIS ARTICLE IS NOT LEGAL ADVICE. ALWAYS CONSULT AN ATTORNEY DIRECTLY BEFORE RELYING UPON THIS ARTICLE OR CHANGING AN ESTATE PLAN.