[WSBAPT] Transfer on Death Deed results in uninsured real property

[Claudia A Gowan]

Agreed. I will be encouraging any TODD clients to consider this issue. Fortunately, I rarely have occasion to use the method - at most 3 times since it was adopted. I checked this weekend in case there are any lingering potential uninsured risks out there! Best, Claudia

Claudia A. Gowan

Claudia A. Gowan, PLLC
1001 Fourth Avenue, Suite 3200
Seattle, WA 98154
(206) 443-2733 (T)
claudia at cagowanlaw.com<mailto:claudia at cagowanlaw.com>

www.seattletrustsandestates.com<http://www.seattletrustsandestates.com/>

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Eric Nelsen
Sent: Monday, May 10, 2021 9:17 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Transfer on Death Deed results in uninsured real property

Yes certainly, but non-probate JTWROS assets are subject to estate debts as well; they're just further down the line under Ch. 11.10 RCW<https://app.leg.wa.gov/RCW/default.aspx?cite=11.10&full=true>.

I haven't read the case that Nick describes but it sounds to me like its logic is: Decedent is the insured; when decedent dies, the property immediately vests in another person (by JTWROS, but I would argue that RCW 11.04.250 does the same thing); that person is not a named insured; therefore, the policy no longer covers the property.

Of course this can be altered by the terms of the insurance contract; it could say that it continues to cover after death of the insured in some circumstances. But in the absence of a contractual fix, I wonder if a post-death homeowner claim could be rejected on this basis.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Claudia A Gowan
Sent: Friday, May 7, 2021 8:25 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Transfer on Death Deed results in uninsured real property

Yes, but Eric, the vesting of intestate, as well as testate heirs, is subject to expenses of administration, claims etc. - so while rights vest, they are still subject to certain taxes & expenses & claims etc. Whereas TODD's avoid the distribution process, more like JTWROS, no? (I'm not considering allocation of expenses here.)

Best, Claudia


-------- Original message --------
From: Eric Nelsen <eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>>
Date: 5/7/21 7:31 PM (GMT-08:00)
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Transfer on Death Deed results in uninsured real property

Thanks Nick! I wonder--same result merely from immediate vesting in intestate heirs under RCW 11.04.250? That's an immediate transfer as well, just not formalized by a deed.
Eric Nelsen
Sayre Law Offices, PLLC
206-625-0092

On May 7, 2021 3:10 PM, Nicholas Pleasants <nick at pleasantslaw.com<mailto:nick at pleasantslaw.com>> wrote:
Hi All,
Some food for thought on this rainy Friday afternoon. I learned that State Farm made some caselaw in the 8th Circuit regarding Transfer on Death Deeds. I've attached the case for your reference, it is Dawn Strope-Robinson v. State Farm Fire and Casualty, No. 20-1147 (8th Cir. 2021). Here are the basic facts:
State  Farm  Fire  and  Casualty  Company  issued  a  homeowner's  insurance  contract  to  David  Strope  for  his  house  in  Orr,  Minnesota.  On  August  10,  2017,  Strope executed a transfer on death deed to convey the property to his niece, Dawn Strope-Robinson.  The  transfer  on  death  deed  was  then  recorded  on  August  11.  Strope died  on  August  14. Six  days later,  Strope's  ex-wife  intentionally  set  the house on fire, damaging the home and personal property inside.
The holding is that the house was not insured because it immediately vested to the niece, and she was not a named insured on Uncle's policy. A possible point of distinction from the Minnesota statute is that Washington would require the recording of the death certificate with a REETA to change the property tax over to the beneficiary. But this is rather scary to think that the home could become uninsured at any moment because the grantor died, and beneficiary, who may or may not even be aware of the Transfer on Death Deed, would need to immediately purchase insurance.
I've used Transfer on Death Deeds from time to time, especially in non-taxable estates with one or a few heirs that get along and want to be able to sell the house without probate. But if this holding were binding on the 9th Circuit, I would not be inclined to have clients use this technique until we come up with a work around for the insurance problem.
I know insurance for a decedent's estate can be tricky in general, especially if the policy is up for renewal shortly after death. Something we should explore to better protect the beneficiaries.
Best,
Nick

Nicholas Pleasants
Owner

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