Transfer on Death Deed: What It Is and How It Works

Creating a transfer on death deed 

Preparing a TOD deed is not complicated, but it must be done in compliance with state law. It's advisable to consult a legal professional or use state-approved forms to ensure your TOD deed meets all legal requirements and effectively serves its intended purpose. Here are the general steps you’ll follow to create one:

Step 1: Prepare the deed

Your TOD deed must comply with state law and include specific information:

• Party names: Grantor (current owner) and grantee beneficiary
• Property details: Legal description of the property
• Signatures and witnesses: Grantor signature with required witness and notary provisions
• Formatting: Proper type size and space for recording stamps

The deed must include special language clearly stating the beneficiary's name (as "grantee beneficiary") and that the transfer takes effect upon the owner's death.

Step 2: Sign and notarize

After preparing the deed, you must sign it in the presence of a notary public. Some states may require additional witnesses, so check your jurisdiction's requirements.

Step 3: Record the deed

The TOD deed must be recorded in the county property records where the property is located before the owner's death. Take the original deed to your county clerk's office, land records office, or register of deeds, and pay the recording fee.

The clerk will stamp the deed with the received date and officially enter it into county records. They'll then return the original to you.

Common problems with transfer on death deeds

While TOD deeds are useful estate planning tools, they come with potential complications:

• Limited availability: TOD deeds aren't recognized in all states, creating challenges for owners with multi-state assets
• Joint ownership complications. All co-owners must unanimously agree to the deed, and one owner's death may disrupt the transfer process.
• Beneficiary predeceases owner. Without a named alternate beneficiary, the property may end up in probate.
• Debt liability. Beneficiaries inherit the property along with any liens, mortgages, or claims against it.
• Documentation issues. Poor records of revocations or modifications can lead to disputes and unintended transfers.
• Title problems. Incorrect execution or existing property claims may require legal intervention to resolve.
• Government benefits. Inherited property can affect beneficiaries' eligibility for Medicaid and other means-based programs.
• Family disputes. Unequal asset distribution may trigger disagreements or legal challenges.

Given these potential issues, it's crucial to consult an estate planning attorney before creating a TOD deed. An attorney can confirm it aligns with your overall estate plan and help you avoid costly complications.

Alternatives to transfer on death deeds

Consider these alternatives to TOD deeds:

• Will. Specifies how your assets are distributed after death. Property goes through probate, but you gain flexibility in dividing assets and naming guardians for minor children.
• Living trust. Transfer property into a trust while maintaining full control as trustee. Assets pass to beneficiaries without probate upon your death.
• Gifting. Transfer property to beneficiaries during your lifetime. You give up control immediately and may face tax implications.

To help you determine the best option for your needs, consider using our last will and trust assessment service. Attorneys from our independent network can guide you through the entire estate planning process. This includes financial power of attorney and healthcare directives , to help ensure your property is distributed according to your wishes.