If you own real property and are looking for a way to avoid probate, you need to understand the benefits of a transfer on death deed. This simple document may help you to simply and inexpensively avoid probate for real estate.
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by Edward A. Haman, Esq.
Edward A. Haman is a freelance writer, who is the author of numerous self-help legal books. He has practiced law in H...
Updated on: February 10, 2023 · 4min read
Probate can be expensive and time-consuming, but it may be avoidable. For real estate, one way is with a transfer on death deed (TOD deed).
In a TOD deed, the current owner designates one or more persons as beneficiary. The beneficiary automatically becomes the owner of the property when the current owner dies. A beneficiary can be an individual or an organization such as a charity. In some states a TOD deed is referred to as a beneficiary deed, TOD instrument or deed upon death.
As of September 2019, the District of Columbia and the following states allow some form of TOD deed: Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Illinois, Indiana, Kansas, Maine, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming. Ohio has replaced the TOD deed with a TOD affidavit, but the effect is the same. With a trend toward permitting TOD deeds, more states may be added in the future. A few states, such as Michigan, have a similar but technically different document, commonly called a Lady Bird deed.
If your property is not located in a state that allows TOD deeds, you may still be able to avoid probate by other means, such as transferring property to a living trust.
Deeds held by married couples typically state that they own property “as joint tenants with rights of survivorship" or as “tenants by the entireties." If one spouse dies, the surviving spouse automatically becomes sole owner. A married couple may also create a TOD deed. The beneficiary will not acquire the property until the second spouse dies, but the surviving spouse can revoke the TOD deed before then.
A beneficiary should be designated by name, never just by their relationship to you. If you designate two or more beneficiaries, indicate how they will take title — typically either “as joint tenants with rights of survivorship" or “as tenants in common." You may also designate alternative or successor beneficiaries, in case the first beneficiary dies.
Following are a few benefits of the TOD deed compared with other methods of transferring property upon death:
Other advantages of a TOD deed may include:
As with any real estate deed, the document must comply with state law. All real estate deeds must include certain information, such as the names of the grantor (current owner) and grantee (beneficiary), legal description of the property, signature of the grantor, and legally required witness and notary provisions. Other requirements may include minimum type size and formatting to allow space for recording stamps.
Special language must be used to create a TOD deed, clearly stating the name of the beneficiary, who is usually referred to as the “grantee beneficiary," and that transfer will take place upon the death of the current owner.
Prior to the death of the current owner, the TOD deed must be recorded in the property records of the county where the property is located. This is simply a matter of taking the original TOD deed to the county public records office — usually the county clerk or register of deeds — and paying a small fee. The records clerk will take the deed, stamp it to indicate the date it was received, take whatever other action is necessary to have it officially entered in the county records and return the original to you.
Preparing a TOD deed is not complicated but must be done in compliance with state law. Some states have an approved form, and using it may be the safest way to be sure your compliance.
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