How to Transfer Property to a Relative in Minnesota

No two states are alike when it comes to geography, politics or climate, but when it comes to transferring real property, the procedure is pretty much the same everywhere. In Minnesota, like in other states, real property is transferred by deed. This is the case regardless of whether it is transferred to a relative or to a stranger.

The transfer of real property can be handled in one of a number of different ways depending on the desire and intent of the current owner.

These transfer methods include using a quitclaim deed during the owner's lifetime or at the owner's death; transferring by will or by intestate succession after probate; using a transfer on death deed (TODD); or creating a joint tenancy interest.

The living trust is a common vehicle to transfer property and avoid probate, and it is perfectly legal in Minnesota. A living trust can be used to transfer property at death. By making a revocable trust, the grantor retains control of the real property during their lifetime.

A deed is both an instrument that transfers ownership of real property from one owner to another and also a legal statement of who owns the property. Minnesota deeds contain the names of the current owner and the new owner, termed respectively the grantor and the grantee. They also contain a legal description of the property.

The grantor must sign the deed and have their signature notarized in order to accomplish a transfer of property. The Minnesota deed is then recorded in the county where the property is located. While recording is not necessary to establish ownership between the grantor and the grantee, it is necessary to put third parties on constructive notice about ownership.

In Minnesota, the primary types of deeds used to transfer property are:

• General warranty deed.
• Limited warranty deed.
• Quitclaim deed.
  

Each type of deed provides different warranties to the grantee. The general warranty deed provides the most protection and is the one most generally used for property transfers between strangers in Minnesota. By using this deed, the grantor guarantees that the title is good and marketable and agrees to defend the grantee from all claims made by third parties.

Limited warranty deeds contain less protection, often guaranteeing only against title issues arising during the period of time the current owner held the property. Quitclaim deeds provide no protection at all.

The quitclaim deed is often used in Minnesota to transfer a property interest between relatives. For example, if parents or grandparents wish to transfer a house to a child or a grandchild, the quitclaim deed is appropriate. It is also used frequently to transfer property during a divorce.

A quitclaim is not an ordinary deed form, and it makes absolutely no promises about what interest it is conveying. In Minnesota law, it is said to be "sufficient to pass all the estate which the grantor could convey by deed of bargain and sale." But the deed offers no clue as to what that interest might be.

It conveys to the named grantee "all right, title, and interest of the grantor in the premises described," and contains no warranties of title. A stranger paying a grantor good money for real estate will want more than the assurance that they are getting only the interest that the grantor has. They need to know what that interest is. That is why the quitclaim deed is usually used only in "non-sale" transactions between family members.

If the grantor wishes to keep the property until they die, they can arrange to transfer the property when they die in one of several ways. The Minnesota property owner can write a will that identifies the property and also the person who will inherit it. The estate will go through probate, and a probate deed will be issued to transfer the property as directed.

Likewise, if the relative to receive the property is the closest family member to the owner, such as a surviving spouse, the owner can also accomplish this transfer by dying without a will.

In Minnesota, when someone dies without a will, the property passes according to the state's intestate succession statute. Close relatives like surviving spouses and children are first in line to inherit, followed by more distant relatives. Probate is required.

Probate is the legal process of settling the estate of a deceased person in Minnesota. It includes collecting and paying estate debts, and distributing the decedent’s property to those entitled to receive it. All real and personal property owned by the decedent individually or as a tenant in common is subject to probate.

Another option for an individual to pass property title when they die is by creating a Transfer on Death Deed, also known as a TODD. This document states that the grantor wishes a specified piece of real estate to pass to a particular person or persons when the grantor dies.

This is permitted in Minnesota. It works the same way as a payable on death (POD) designation on a bank account. The person named to receive the property takes ownership of the property when the current owner dies and not before. In fact, they have no rights or control of the property until the owner dies.

The owner must sign a TODD while they are alive, but the transfer of ownership doesn’t happen until their death. They can revoke or change the TODD at any time before death.

Another way to transfer real estate property at death to a relative is to give them a current joint interest. In fact, this is the way most married couples in Minnesota own their homes. In Minnesota, if two people own property as joint tenants, the surviving joint owner inherits in their sole name when one owner dies.

This happens automatically. All that is required by the state of Minnesota is for the surviving joint owner to file an Affidavit of Identity and Survivorship with the county and a Certified Copy of the Death Certificate. This procedure is sufficient to transfer ownership to the surviving joint tenant.

The danger of using this type of deed is that the owner is essentially giving away a current property interest. They will not be able to rescind the gift later, even if they want to. Transferring a current interest of land is not something to undertake lightly.

Another option in Minnesota is to transfer the property title to a trust. Since Minnesota recognizes living trusts, it is possible for a resident to transfer the real property in question to a trust, make themselves the current beneficiary, and the family member the beneficiary who will inherit on the death of the first beneficiary. Selecting a revocable trust gives the grantor total control during their lifetime.

A Minnesota living trust is a legal document that allows you to grant ownership of your property and assets to certain beneficiaries after you’ve died. It is one way to avoid having the assets go through a probate proceeding.

As part of a living trust arrangement, a trustee is named to manage the trust’s assets. They must follow the trust instructions and distribute appropriate assets and property to the correct parties. Many individuals make themselves the trustees of their own trusts, but it is also possible to nominate a trusted friend or professional to the role.

Living trusts in Minnesota can be revocable or irrevocable. If an individual creates a revocable living trust, they can remove any assets from the trust and change the beneficiaries as they see fit. On the other hand, an irrevocable trust is set in stone. It cannot be changed by the grantor once assets are placed into the trust absent the express permission from all beneficiaries named in the trust.

It is not difficult to create a living trust in Minnesota. Many people are able to do this themselves online, while others opt to consult an attorney. Whichever works best in a particular situation, it is important to follow the state guidelines.

More than one thing must be done to create a Minnesota living trust. Think of the project as six separate steps, as outlined below:

1. Opt for either a single or joint living trust. Anyone who is married should consider using a joint living trust, in which both spouses place assets and property. This requires an agreement between spouses as to what property should be put in trust and who the subsequent beneficiaries should be.
2. Decide between a revocable and an irrevocable living trust. When in doubt, work with an attorney or a financial advisor to be sure to make the choice that works best in the situation.
   
3. Select the assets to place in the living trust. Anything from real estate to stocks to jewelry can go into this type of trust, which means that they will not have to go through probate in Minnesota when the grantor dies. This makes transfer easier, faster and less expensive.
   
4. Choose the person to be the trustee of the living trust. The most popular choice in Minnesota and elsewhere is to name oneself as trustee. However, it is also necessary to name a successor trustee to step up to act once the maker dies. Pick someone trustworthy who will distribute assets according to directions.
   
5. Prepare the living trust document online. Those who do not feel they can do this themselves can hire an attorney to accomplish it.
   
6. Go to a notary and sign the living trust document in front of the notary.
   
7. Transfer the assets and property selected into the living trust: This paperwork can be tricky, particularly for real estate, so don't hesitate to work with a lawyer.

While all of these options may be intimidating, it is good to have several different choices for accomplishing a property transfer. Consider questions like how important is it to retain control over the property. Sometimes it is perfectly fine to make a plan that cannot be changed at will, but many individuals prefer to retain the right to alter arrangements as circumstances change.

What to place in the trust and whom to name as beneficiaries are important considerations as well. The more time and effort an individual invests in mulling over their options, the greater chance they have of arriving at a plan of action that works well for them.