Transfer on Death Deeds are growing in popularity in the U.S. and are now allowed in about 27 states, including Minnesota, Washington and Alaska. They can be a great additional tool for estate plans. Here is a general overview of what they are and how they work:
– A Transfer on Death Deed or TODD is a deed that lets you to select a beneficiary to receive your real estate property upon your death.
– The beneficiary may be a person or entity.
– The beneficiary will have no rights to your property while you’re alive.
– You can name multiple beneficiaries or alternate beneficiaries, in the event one or more beneficiaries refuse your property or aren’t around to receive it.
– For property owned and deeded jointly, the interest conveyed transfers to the beneficiaries only after the death of the last surviving grantor owner.
– If you still owe money on the property or if the county, state, a contractor or a creditor has a judgment or lien on it, your beneficiaries will inherit these responsibilities along with your property.
– There are no gift tax implications upon recording the TODD.
– The TODD can be revoked at any time by recording a revocation or creating a new TODD that replaces the original one. However, a TODD cannot be revoked by Will.
– A grantor owner can still sell the property at any time despite the TODD, which will then become void or ineffective upon the sale.
– A TODD is one way to avoid having your property go through the probate process after your death.
– The TODD must be recorded prior to the death of the grantor owner upon whose death the conveyance is effective, and recorded in the county where the property is located. Delivery of the deed to the beneficiary is not required nor does the beneficiary need to consent or receive notice of the deed during the lifetime of the grantor owner.
– After the death of the grantor owner or owners, the evidence used to establish that a transfer has occurred to the beneficiary is similar to the evidence necessary when a joint tenant dies, with some other possible requirements. These requirements may vary from state to state, so you need to research what your state requires.
– A TODD is most often used for individuals with estates that do not need estate tax planning and where the only asset that would be subject to probate is the home.
While a TODD can give you additional flexibility and a low-cost option for probate avoidance, it is not suitable for all circumstances and a thorough discussion of these deeds is beyond the scope of this article, so you need to seek the advice of an estate planning attorney to determine whether a TODD could be right for you.