Q: My parents suggested giving me a deed to their house but not recording it until after they die. Can this be done and is it a good idea?
A: Can it be done: yes. Is it a good idea: I’m not sure that it is.
Having unrecorded deeds was actually an estate planning devise used by some attorneys when I first started practicing law. I don’t think it was widespread but I can think of a couple of attorneys that used this planning technique at least occasionally.
Now don’t get me wrong, you can record an old unrecorded deed. As far as I know, there is not a statutory time limit on when a deed must be recorded. On the other hand, I’m usually pretty good about getting deeds recorded promptly so I haven’t researched the issue.
In any case, I think the potential problems outweigh the benefits. First, remember that things get lost, misplaced and thrown away. I meet with people all of the time that don’t have a clue where the original deed to their home is located. The thought of having an unrecorded deed sitting around for 10 or 20 years gives me the willies.
Another thing to remember is that until that deed is recorded, title hasn’t changed. For gift tax purposes, it’s an uncompleted gift. Also, in the years between the signing of the deed and the recording of the deed, the grantor still own it. They can therefore issue a deed and convey title to someone else or mortgage the property. The property can also be liened by creditors of the grantor. In other words, when you go to record the deed, you may discover you can’t get clear title to the property.
You can also run into estate issues after the grantor’s death. If the property is in the name of the decedent when they die, the property may transfer to someone else, either by will or intestacy. I’m not saying you won’t eventually get title but you may have to fight for it.
Finally, we have better options now. In my opinion, the Transfer on Death Deed changed everything. You can now keep title to your home without any restrictions and name beneficiaries to the title for after your death. If your goal is to transfer title to your home after your death without probate, a TOD deed is a great option.
Although you may be able to use unrecorded deeds, I’m not a big fan. This especially true now that we have TOD deeds.