Should I Use a Deed for Estate Planning in Wyoming?
Why You May Want to Avoid Probate.
It seems that the general advice or consensus is that it is best to avoid probate. But do you know why? If you are in a state that has a Uniform Probate Code, it might be best to process the estate via a probate because you will have a built-in judge and will most probably get a good result. What if you are in a state like Wyoming that does not have the Uniform Probate Code?
Often the use of a revocable trust for probate avoidance is the best choice. Trusts are discussed on this website. The use of joint tenancy with right of survivorship or tenancy by the entireties are also recognized for probate avoidance at the time of the first death.
However, there are times that other probate avoiding arrangements using the proper deed may be used alone or together with other assets transfer devices.
Transfer on Death Deed.
Wyoming has the Nontestamentary Transfer of Real Property Death Act which was adopted in 2014. The Act allows the owner of real property to execute and record a deed during the owner's life that will grant an interest in the property to one or more grantee beneficiaries and successor grantee beneficiaries who will receive the property upon the owner's death. If the property is jointly owned, the transfer on death deed can indicate the transfer will occur upon the surviving owner's death.
The Deed in the Desk Drawer.
Often in Wyoming, if you live for example, in a remote area far away from the recorder's office, a deed would be signed granting the real property to the client's children or spouse, and then it would be put in the desk. The client's lawyer or family would then take the deed to the county clerk to record it on the death of the client.
However, as a matter of law legal title to the property conveyed by such a deed is fragile and may not withstand judicial scrutiny. The reason the deed may be invalid is that it is required to be not only signed and notarized, it must be "delivered". And delivery to the grantee needs to occur prior to death. That is because no delivery occurs where the deed remains under the grantor's control and is subject to being revoked by the grantor.
And so the moral of this story is that the best way to effectively convey your real property to avoid probate is to be sure the deed is signed, notarized and delivered.
There are other methods for conveying real property to avoid probate that are beyond the scope of this page. I would be pleased to discuss them with you if you wish.
Wrong Kind of Deed.: The Quitclaim and the Warranty Deed.
There is a very big difference between a quitclaim deed and a warranty deed but I do see the two types of deeds used interchangeably or at the wrong time.
A quitclaim deed relieves the grantor of any liability with respect to title problems or defects that the grantor is conveying to the grantee. However, many times in intra-family estate and business transactions, it would be much better to allocate the risk to the grantor rather than the grantee. And it is almost always better to have some kind of warranty protection rather than no protection at all, which is what the warranty deed provides. There is no protection with a quitclaim deed.
When a deed is being used to fund a revocable trust or to transfer family property to a family limited partnership or family LLC, a warranty deed is usually the better choice. Using a quitclaim deed may be harmful because of the loss of any title insurance coverage that otherwise might have protected title to the property owned by the grantor. A warranty deed is exactly that--a warranty or guarantee of certain "rights" that are included with the deed, including that the grantor (1) is the rightful owner of the property; (2) has the right to convey (3) the right to the property is free and clear (4) title will withstand any third party claims (5) grantor will do what is necessary to make good the title. The warranty deed has the greatest protection to the purchaser while the quitclaim deed makes no guarantee.
Bad Mineral Reservations in Deeds.
Another way "deeds go bad" is the deed which fails to reserve mineral rights in favor of the grantor. The use of the wrong kind of deed or a poorly worded deed can result in the conveyance of minerals that the grantor intended to keep. The deed used, which should be a warranty deed, must reserve the interest of the grantor in the mineral rights to the grantor if you wish to only convey the surface ownership. Here is an article on the types of deeds and mineral interests.
Probate Avoidance Method.
For personal as well as real property, the standard probate avoidance method might be the revocable living trust if the estate of the client exceeds the $200,000 limit for summary administration. I have found that clients may place things in joint names with right of survivorship which works best between a parent and a child if probate is desired to be avoided for the parent. However, this does not work so well for a husband and wife unless the survivor quickly adds a new joint owner at the time of the first death.
Pay on Death and Transfer on Death.
In Wyoming in 1980 the legislature adopted "pay on death" or POD to allow a death beneficiary to be designated with respect to a financial account. In 1993 the legislation was added to permit "transfer on death" or TOD to be made for securities and security accounts. Even with POD or TOD registration, in Wyoming the statutes vest outright ownership in the beneficiary. With respect to the entitlement to a joint account at death, Wyoming statutes provide any portion of a joint account may be paid by the bank in accordance with the contract of deposit. I have written a separate article about the ownership of a bank account that the Wyoming Supreme Court clarified in the Fleig case, and you can find how to own your bank accounts in that article.
The documents that could be used regarding transferring personal property that would be similar to a deed would be a stock power, bill of sale or endorsed title, among other tools.
I would be pleased to help you determine how to best plan for making sure a conveyance or gift is made properly. I offer a free telephone consultation (307.200.1914) or videoconference.