Here’s what you need to know about using Pocket Deeds…

In this episode of Coffee with Carl, attorney Carl Zoellner summarizes the benefits for using a pocket deed.

Forget what’s in your wallet and check your pockets first. 

While it may sound joke-y, pocket deeds can be extremely effective– in the right circumstances. 

A pocket deed is a deed that is signed during a person’s life but not recorded in the land records until after the person dies. 

Why?

Doing this accomplishes two goals: Retained control and avoiding probate. 

So, let’s get into it. 

A deed must be in writing because it’s used to transfer property and there needs to be documentation of the guarantor showing the person having legal capacity to do it. 

The grantor and grantee must be identified and in such a way as to be easily ascertainable. We need to know who it’s coming from and who it’s going to. Usually the chain of title is enough to satisfy this element. 

So, just as an FYI as to how the property must be adequately described, a deed operative word of conveyance must be present.   

For those of you familiar with deeds, this is basically where it states the “to and from” language as it would on all standard deeds, not a high bar to meet.  

The deed must be signed by the guarantor or guarantors of properties owned by more than one person. Then, the deed must be delivered to the grantee or someone acting on the grantees behalf and must be accepted by the grantee. Typically, deeds are accepted in delivery and acceptance is most commonly done. 

Acceptance and delivery can happen without the recording and this is where that pocket deed comes in.  

A pocket deed, just like most deeds covers many bases but is not filed with the county. Which means there is no notification to the local authorities that the property may have transferred. 

The scenario is, is technically if there was a transfer tax due upon transfer, the transfer still would have occurred so you’d still be subject to that if you recorded it or if you reported it.

Now, what most people are doing because of the cumbersome transfer tax requirements in parts of Pennsylvania is they’re holding on to this deed. And if for some reason something comes up, they can then produce the deed to show the transfer occurred. 

But it’s not automatically triggering anything at the Pennsylvania county level because it’s not filed.

When it’s filed, it automatically triggers it. 

You get the transfer, tax notice, and all the bells and whistles. 

It’s a option that’s out there. And to stress this one more time, it doesn’t relieve you from any of those consequences of transferring the property should you need to do it. But it does create a scenario where you can, sort of choose when to notify the state if you need to, that you did transfer the property.

I have several Pennsylvania clients who use it and like it, but you need to understand what’s happening and what could happen under certain scenarios . 

Pocket deeds, they’re out there and available. 

It’s just a matter of do you need to file? Or would you like to hold it in your pocket for a just in case time? 

I know it can be a confusing area because most people aren’t super familiar with pocket deeds, but hopefully that provides a little insight on the back end on how the deed is still effective. 

The Takeaway 

Keep taking advantage of our FREE educational opportunities and the free content we put out on the web. So that’s Toby’s Tax Tuesday, our tax and AP events for our clients who’ve already gone through our Tax and Asset Protection event.  

Our Structure Implementation Series is fantastic. That answers a lot of the questions you have in the beginning. So there are a lot of different educational opportunities out there. One of my favorites as well is our Infinity Investing Workshop

Resources mentioned in this video:

Tax & Asset Protection Workshop

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