In Chambers v. Bringenberg, a recent matter of first impression, the Nebraska Supreme Court reversed the decision of the district court and held that a transfer on death (“TOD”) deed did not fall under the plain language of a statute governing homestead conveyances. See Chambers v. Bringenberg, 309 Neb. 888 (2021). Therefore, in the case where a homestead was owned by one spouse, the TOD deed executed by the owner-spouse did not require the non-owner spouse to execute or acknowledge the deed for it to be valid.
This case arose when a surviving husband, David Chambers, brought an action challenging a TOD deed executed by his wife, Eleanor Chambers, before her death. On February 8, 2018, Eleanor recorded a TOD deed for a home she purchased solely in her name and chose her daughter, Angie, as the designated beneficiary. At this time, David neither executed nor acknowledged the TOD deed.
In contending the transfer to Angie was invalid, David relied on Nebraska Revised Statute § 40-104, also known as the homestead statute, which provides that the “homestead of a married person cannot be conveyed or encumbered unless the instrument by which it is conveyed or encumbered is executed and acknowledged by both spouses.” Neb. Rev. Stat. § 40-104 (emphasis added). David argued he was the rightful owner of the home because he did not execute or acknowledge Eleanor’s TOD deed.
The district court found in favor of David on this issue, reasoning that Eleanor’s TOD deed was void because Eleanor was a “married person” who lived at the home in question, and it was therefore “the homestead of a married person” subject to the homestead statute. Accordingly, the district court found the TOD deed was invalid because David did not execute and acknowledge the deed as required under the homestead statute.
In reversing the district court’s decision, the Nebraska Supreme Court considered, as an issue of first impression, whether § 40-104, the homestead statute, applied to TOD deeds.
In its analysis, the court first noted that under the Nebraska Uniform Real Property Transfer on Death Act (“TODA”), a transfer of property through a TOD deed “is effective at the transferor’s death” and “[n]othing in the TODA expressly contemplates any circumstance under which the TOD deed of a married grantor must contain the spouse’s execution and acknowledgment in order to be valid.” Id. at 906. Additionally, the conveyance statutes that are incorporated by reference into the TODA make no reference to homestead protections.
The court acknowledged that “even when both spouses have a homestead interest in the real estate,” it has never previously held “that a spouse cannot validly devise an ownership interest in homestead property without the other spouse executing and acknowledging the will.” Id. at 912. However, the court found that the requirement under the homestead statute did not apply to TOD deeds because, under the plain language of the statute, the words “convey,” “grant,” and “encumbrance” all connotate that the instrument has an inter-vivos effect, where the transfer is made during one’s life. In contrast, the language in the TODA describes a “transfer” between a “transferor” and a “beneficiary” and is the language of a devise, or the passing of title of real estate upon death.
Based on the foregoing, the court ultimately held a TOD deed does not fall under the plain language of the homestead statute because “[w]hat occurs upon a transferor’s death to property that is the subject of a TOD deed is not a conveyance or an encumbrance, but a devise.” Therefore, David’s execution and acknowledgment of Eleanor’s TOD deed was not necessary.
Call Erickson | Sederstrom’s estate planning attorneys with questions on TOD deeds, wills or trusts, or related matters at 402-397-2200 and ask for Andrew Huettner, Dan Dittman, or Michelle Daniels.