TRANSFER ON DEATH DEEDS
To provide advice on how to process real property transfers due to a transfer on death deed, and other items affecting the Register of Deeds after the passage of LB 536.
In 2012, LB 536 was enacted into law and authorizes the use of an instrument known as a “transfer on death deed,” and provides procedures for recording evidence of transfers pursuant to joint tenancy deeds or life estates. The effective date of LB 536 is January 1, 2013.
Procedure and Implementation
Transfer on Death Deeds
A transfer on death deed is a deed that transfers an interest and/or title in real property upon the death of the grantor. When the grantor dies, interest and/or title to the real property will pass to the named beneficiary or beneficiaries in a manner similar to how property passes in joint tenancy. No probate is required, as the real property never becomes part of the estate of the deceased. Transfer on death deeds are revocable at any point prior to the grantor’s death, which means no interest and/or title in real estate will pass to the grantee until interest and/or title to the real estate has vested (only when the grantor has died). Neb. Rev. Stat. § 76-214(2)(b) was amended by section 29 of LB 536 to provide, in relevant part: “The statement described in subsection (1) of this section [the Real Estate Transfer Statement, Form 521] shall not be required to be filed at the time that a transfer on death deed is filed or at the time that an instrument of revocation of a transfer on death deed … is filed.”
Typically, either the grantee or the grantor will file the transfer on death deed when it is first executed. Section 35 of LB 536 (codified at Neb. Rev. Stat. § 76-902(16)) exempts transfer on death deeds and revocations of transfer on death deeds from the documentary stamp tax.
To perfect the transfer of title and/or interest in real estate pursuant to a transfer on death deed, the grantee will file a death certificate as evidence of the grantor’s death. Section 35 of LB 536 (codified at Neb. Rev. Stat. § 76-902(17)) also exempts certified or authenticated death certificates pertaining to transfer on death deeds from the documentary stamp tax. The Form 521 must be filed with the death certificate, which will be processed and forwarded to the county assessor.
Section 29 of LB 536 (now codified at Neb. Rev. Stat. § 76-214(1)) provides that the Form 521 may require a date of death, name of decedent, and whether interest and/or title is affected as a result of the transfer on death deed, joint tenancy deed, or the expiration of a life estate. In its present form, the Form 521 may still be used as follows:
Section 3 of LB 536 (now codified at Neb. Rev. Stat. § 76-3403) provides, in relevant part: “The Nebraska Uniform Real Property Transfer on Death Act applies to a transfer on death deed made before, on, or after [January 1, 2013] by a transferor dying on or after [January 1, 2013].”
This section recognizes the validity of transfer on death deeds executed prior to January 1, 2013 if the grantor dies on or after January 1, 2013. If the grantor dies before January 1, 2013, the transfer on death deed will not be effective. If a transfer on death deed is presented for recording prior to January 1, 2013, the Form 521 must be filed. Documentary stamp tax, if applicable, will be due if the deed is presented for recording prior to January 1, 2013, as the exemption for transfer on death deeds will not yet have become operative.
Other Transfers Requiring a Death Certificate
In addition to the transfers on death deeds, Section 31 of LB 536 (now codified at Neb. Rev. Stat. § 76-2,126) requires a death certificate to be filed for transfers of: (1) real property held under a joint tenancy deed as a result of the death of a joint tenant; and (2) real property held under a life estate as a result of the death of a life tenant. The Form 521 must be filed, recording the same information described above.
Transfers Between Spouses and Ex-spouses
Section 35 of LB 536 (now codified at Neb. Rev. Stat. § 902(5)(a)) provides an exemption for deeds between “spouses, between ex-spouses for the purpose of conveying any rights to property acquired or held during the marriage, or between parent and child …”
There is no time limitation to this exemption. If property was acquired 20 years ago by a couple that divorced 10 years ago, and the couple continued to hold the interest and/or title jointly after their divorce, a transfer in the present day would still qualify for the exemption.
Ruth A. Sorensen
Property Tax Administrator
October 17, 2012
Douglas A. Ewald
October 17, 2012