TOD for personal property

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
donocash
Posts: 453
Joined: Sat Mar 03, 2007 8:57 pm

TOD for personal property

Post by donocash » Thu May 01, 2014 6:45 pm

A question on estate planning.

In the state of Ohio, much of what you own can be transferred to your heirs by using payable on death or transfer on death affidavits, as I understand it. Investments, bank accounts, cars, and real estate can be all transferred to heirs at death this way without probate.

This leaves the question of personal property - essentially, in my case, the contents of the house (electronics, furniture, clothes, accumulated junk etc.). Can personal property somehow be covered by a transfer on death affidavit, or does it have to go through probate (assuming no trust)? Do items have to be specifically itemized on the affidavit, if a TOD can be established?

Thanks in advance for your help. Any advice you can give on how to avoid probate on personal property without establishing a trust would be greatly appreciated.

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: TOD for personal property

Post by sscritic » Thu May 01, 2014 7:10 pm

Sure there is!

a small estate procedure in Ohio. But I am confused by your words. It is not a TOD affidavit, and it is a type of probate, simplified, but still probate.
Ohio has a simplified probate process for small estates. To use it, an executor files a written request with the local probate court asking to use the simplified procedure. The court may authorize the executor to distribute the assets without having to jump through the hoops of regular probate.
You can use the simplified small estate process in Ohio if:
1. The value of the estate is $35,000 or less.
or
2. The surviving spouse inherits everything, either under a will or by law, and value of the estate is $100,000 or less. Ohio Rev. Code Ann. § 2113.03.
(A) Subject to division (I) of this section, an estate may be released from administration under division (B) of this section if either of the following applies:

(1) The value of the assets of the estate is thirty-five thousand dollars or less.

(2) The value of the assets of the estate is one hundred thousand dollars or less and either of the following applies:

(a) The decedent devised and bequeathed in a valid will all of the assets of the decedent's estate to a person who is named in the will as the decedent's spouse, and the decedent is survived by that person.

(b) The decedent is survived by a spouse whose marriage to the decedent was solemnized in a manner consistent with Chapter 3101. of the Revised Code or with a similar law of another state or nation, the decedent died without a valid will, and the decedent's surviving spouse is entitled to receive all of the assets of the decedent's estate under section 2105.06 of the Revised Code or by the operation of that section and division (B)(1) or (2) of section 2106.13 of the Revised Code.

(B) Upon the application of any interested party, after notice of the filing of the application has been given to the surviving spouse and heirs at law in the manner and for the length of time the probate court directs, and after notice to all interested parties by publication in a newspaper of general circulation in the county, unless the notices are waived or found unnecessary, the court, when satisfied that division (A)(1) or (2) of this section is satisfied, may enter an order relieving the estate from administration and directing delivery of personal property and transfer of real property to the persons entitled to the personal property or real property.
and so on.

Alan S.
Posts: 8931
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: TOD for personal property

Post by Alan S. » Thu May 01, 2014 7:34 pm

Most states have some version of abbreviated probate or affidavit procedure for small estates. Therefore, if you can shrink your probate estate by setting up your other assets to pass by operation of law (eg TOD, Joint tenancy, JTWROS, ITF, POD, beneficiary deed, vehicle, boat or plane registration etc), then the property remaining may consist of personal property only and be valued low enough to qualify for small estate procedures.

If PP is small and you know your state intestate laws, you could depend on those and save yourself the cost of a will, but your personal rep will still have to deal with probate or surrogate courts of some kind to transfer ownership. In some cases that means the lucky individual will get to gather up and donate your junk :D

To answer the basic question, the above operation of law options generally are not available for personal property.

lululu
Posts: 1378
Joined: Thu Apr 10, 2014 4:23 pm

Re: TOD for personal property

Post by lululu » Thu May 01, 2014 8:10 pm

donocash wrote:A question on estate planning.

In the state of Ohio, much of what you own can be transferred to your heirs by using payable on death or transfer on death affidavits, as I understand it. Investments, bank accounts, cars, and real estate can be all transferred to heirs at death this way without probate.

This leaves the question of personal property - essentially, in my case, the contents of the house (electronics, furniture, clothes, accumulated junk etc.). Can personal property somehow be covered by a transfer on death affidavit, or does it have to go through probate (assuming no trust)? Do items have to be specifically itemized on the affidavit, if a TOD can be established?

Thanks in advance for your help. Any advice you can give on how to avoid probate on personal property without establishing a trust would be greatly appreciated.
Why not fork out for a revocable living trust, with a rollover into the trust provision in the will. I know you prefer not to, but it's a simple procedure.

Topic Author
donocash
Posts: 453
Joined: Sat Mar 03, 2007 8:57 pm

Re: TOD for personal property

Post by donocash » Thu May 01, 2014 8:21 pm

Alan S. wrote:Most states have some version of abbreviated probate or affidavit procedure for small estates. Therefore, if you can shrink your probate estate by setting up your other assets to pass by operation of law (eg TOD, Joint tenancy, JTWROS, ITF, POD, beneficiary deed, vehicle, boat or plane registration etc), then the property remaining may consist of personal property only and be valued low enough to qualify for small estate procedures.

If PP is small and you know your state intestate laws, you could depend on those and save yourself the cost of a will, but your personal rep will still have to deal with probate or surrogate courts of some kind to transfer ownership. In some cases that means the lucky individual will get to gather up and donate your junk :D

To answer the basic question, the above operation of law options generally are not available for personal property.

Thank you for your thoughtful response.

Let me give you a hypothetical situation, which is not far from a truth.

I am an old guy. My wife is deceased. I have two children. My house, cars, bank accounts and investments are all covered by a transfer/payable on death.

Then I die. My kids claim the real estate by payable on death/transfer of death affidavits, as well as the car and the bank accounts and investments. They split the cash from all of the liquid assets - cash and investments, and agree on the disposition of the car. They agree to sell the house the next spring, six months later. The buyer wants some of the obvious stuff that goes with a house (eg appliances, maybe a piece of furniture), and the kids have an auction/garage sale for the stuff that is left. My kids are good kids, and they're smart kids, and they love and respect each other. There isn't going to be a fight over any personal detritus left over from my life. There's nothing of sentimental value that I haven't already gifted to them on a fair and equitable basis. They split the proceeds, and call it a day.

Who is there to demand a probate process? Let's say I do have a will to cover the personal property. After six months, with the heirs in agreement, who is going to be hovering over the arrangement to dispose of the personal property so that they can demand a probate process, abbreviated or otherwise? Who would have the legal status to challenge it?

Or, could I in writing give all of my personal property to my kids as a gift? It's now their stuff, I'm just keeping it at my house for them!

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: TOD for personal property

Post by sscritic » Thu May 01, 2014 8:26 pm

Sure there is!

a reason for someone living in Ohio to learn the laws of Ohio and not the laws of California.

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: TOD for personal property

Post by sscritic » Thu May 01, 2014 8:35 pm

Sure there is!

another idea. Give them the property, then rent it back from them. Sign a rental agreement to make sure everything is documented. To make it really real, don't pay the rent on some of the property one month, and then have them repossess it. They can even bring the sheriff with them. That should be ample proof that they are the owners. :)

Edit: I guess that should be called TBD.

User avatar
pjstack
Posts: 1308
Joined: Tue Feb 20, 2007 5:03 am
Location: Harbor City, CA

Re: TOD for personal property

Post by pjstack » Thu May 01, 2014 8:44 pm

sscritic wrote:Sure there is!

a reason for someone living in Ohio to learn the laws of Ohio and not the laws of California.
I'm confused. I reviewed the posts and didn't see California mentioned anywhere.

Anyway, I suspect the disposition mentioned by the OP in his last post happens all the time. A simple will should suffice.

As long as all the stuff with "paperwork" involved (car, house, bank accounts, etc.) is taken care of via TOD and there are no contentious relatives on the scene, I doubt if anyone is going to contest a yard sale.
pjstack

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: TOD for personal property

Post by sscritic » Thu May 01, 2014 8:57 pm

pjstack wrote:
sscritic wrote:Sure there is!

a reason for someone living in Ohio to learn the laws of Ohio and not the laws of California.
I'm confused. I reviewed the posts and didn't see California mentioned anywhere.
Sure there is!

a reason to be confused.

The OP mentioned Ohio. I made a leap and interpreted that to mean he lived in Ohio. I quoted the law of Ohio for him (I have to do that a lot, help people with the laws of their own states). Alan S. gave a good answer, but one that was not specific to Ohio, but was a general statement about the way many of the laws in many of the states, including, although possibly not, California, work. Since probate law is state and not federal, I was suggesting to the OP that he stick to his own kind (ala West Side Story).

P.S. Of course the message of WSS is the opposite, but when it comes to state law, I find sticking to your own state law to be the best approach.

Topic Author
donocash
Posts: 453
Joined: Sat Mar 03, 2007 8:57 pm

Re: TOD for personal property

Post by donocash » Thu May 01, 2014 9:42 pm

I appreciate all of the responses.

So, here's where it stands. I am not interested in fooling with a trust, and I have no interest in leaving the kids with a simplified probate process. Everything I have can be disposed of easily with TOD/POD except personal property

This leaves me with three choices to leave my personal property to my kids:

1) Find some way under Ohio law to leave my personal property to my kids under a transfer on death affidavit. One poster suggests that this is unlikely.

2) Gift my kids all of my personal property in writing while I'm still living. Not enough in value to be a taxable event under IRS tax rules, but a pain to come up with a fair value estimate.

3) Leave a will clearly leaving everything to my kids, but tell them they can ignore probate. Wait a few months, then they can sell/donate/keep/throw in the trash all the house contents. No one monitors the disposition, and no one has any standing to interfer as long as the kids agree with one another.

Best choice? Other alternatives?

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: TOD for personal property

Post by sscritic » Thu May 01, 2014 10:02 pm

Sure there is!

not a lot gained by TOD. Your kids still have to run around town with official copies of your death certificate. Vanguard has to be notified, and they will need your kids to identify themselves to the standards that Vanguard demands, maybe notary, maybe medallion signature guarantee. And of course they will need to open new accounts to accept the split of your shares. They have to get your car retitled, as well as everything else. Even things in joint names have to be unjointed.

And don't forget the tax returns they will have to file for you.

When you think of all they have to do, going to the probate court to file a request to be exempt from court supervision seems like very little, maybe an extra 4%.

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: TOD for personal property

Post by sscritic » Fri May 02, 2014 12:06 am

donocash wrote: 1) Find some way under Ohio law to leave my personal property to my kids under a transfer on death affidavit. One poster suggests that this is unlikely.
Sure there is!

a way to google for Ohio Transfer on Death Designation Affidavit.*
Q: What is a TOD Designation Affidavit?
A: A TOD Designation Affidavit is an “effective upon death deed” allowing the property owner to directly transfer the ownership of real estate upon the owner’s death to whomever the owner designates by name.
This and many other references reference real estate. I would use a stronger term than unlikely.

* You left out the Designation part.
(B) Real property or an interest in real property that is the subject of a transfer on death designation affidavit as provided in section 5302.22 of the Revised Code or as described in division (A) of this section has all of the following characteristics and ramifications:

lululu
Posts: 1378
Joined: Thu Apr 10, 2014 4:23 pm

Re: TOD for personal property

Post by lululu » Fri May 02, 2014 5:15 am

The more I read this, the more confused I get. The OP is tying himself and his kids in knots with potential legal pitfalls, to avoid the much simpler procedure of a revocable living trust. Is he confusing this with a more complex trust?

goaties
Posts: 353
Joined: Fri Jan 29, 2010 4:15 pm

Re: TOD for personal property

Post by goaties » Fri May 02, 2014 5:40 am

I have both some personal experience on this to contribute, as well as a question of my own.

When my father died, I was the last of my family. He had a will, but I did not start a probate process. Like the OP, everything had already been TOD'd or beneficiaried to me. Plus, there was no one around to care what happened to the clothes, flashlights (he had 10!) etc. This was many years ago, but....

am I going to be roused from my bed some night by the Probate Police?

Post Reply