Emblements, Not Implements.

Trust me on this, the doctrine of emblements is relevant to the transfer on death deed we discussed earlier this week.  To explain why, it is necessary to discuss what the doctrine of emblements is.

An emblement is defined as annual crops produced by cultivation.  Thus, an emblement is corn, soybeans, or the like.  The doctrine of emblements is important because it addresses ownership of annual crops between the time they are planted and the time of harvest. 

The doctrine arises most often during life estate issues because the doctrine is applicable when a tenancy is of an uncertain duration.  A life estate is of an uncertain duration as the life estate terminates at death.  As a result of the doctrine, when a life estate tenant dies between the time annual crops are planted and harvested, the crops and resulting profit belong to the estate of the life estate tenant.  The crops and resulting profit do not belong to the person or entity who inherits the land where the crops are growing.

How is this relevant to TOD deeds?  Nebraska has a special provision in its statutes which allows a transferor in a TOD deed to designate whether crops growing at the time of the transferor’s death are transferred to the transferor’s estate or to one or more of the designated beneficiaries listed on the TOD deed.  This statutory provision is because the doctrine of emblements.

Confusing?  Or just have questions about other beginning farmer or succession planning issues?  You are welcome to contact us because we’re here to help.

The Transfer on Death Deed … Say What?

We’ve spent some time discussing taxation, contracts (and more contracts with some more contracts thrown in) but I want to turn our focus to estate planning issues.

As of January 2013, Nebraska introduced a new tool in estate planning — the transfer on death deed, or TOD deed.  This blog post gives an overview of the TOD deed but you are encouraged to speak with your attorney or contact us if you have further questions about TOD deeds or estate planning generally.

What is a TOD deed?  It is a deed filed with the Register of Deeds in the appropriate county that allows real property (e.g. land) to transfer upon the owner’s death to the beneficiary designed on the TOD deed.  A TOD deed does not require probate because it is considered a non-probate transfer, just like bank accounts or life insurance policies with beneficiary designations.

What are the requirements?  The TOD deed is only for real property, such as land or residences.  The property must be in the State of Nebraska.  The person transferring the property must be an individual acting only as an individual.  The designated beneficiary may be an individual, corporation, estate, trustee of a trust, partnership, limited liability company, association, joint venture, public corporation, a government or governmental subdivision, agency, or any other legal or commercial entity.

The TOD deed must be signed by the transferor and two disinterested witnesses.  At the same time, a Notary Public must be present to witness all three persons and their signatures on the TOD deed.  The transferor (person make the transfer) must have the same capacity as the capacity required to make a will.

When is a TOD deed filed?  Per Nebraska law, the TOD deed must be filed within thirty days at the appropriate county office where the real estate is located.  If the TOD is not filed within 30 days of its execution, it is invalid.  Additionally, the TOD deed must be filed prior to the death of the transferor.

What if I change my mind?  The TOD deed may be revoked.  Because the TOD deed does not transfer real property until the death of the transferor, the TOD deed may be revoked.  The transferor must filed a revocation of the TOD deed in the same appropriate county office within 30 days of executing the revocation.  A divorce automatically revokes a TOD deed if the now-divorced spouses are a transferor and beneficiary respectively.

In short, the TOD deed is a tool in the estate planning toolbox.  Each specific estate plan requires different questions and considerations.  Thus, feel free to attend our workshops or contact your attorney for further information about your estate planning goals.