A Transfer on Death (TOD) Deed is a legal document that allows you to transfer ownership of your real property to a named beneficiary upon your death. This type of deed is also known as a beneficiary deed or a revocable transfer on death deed. In this blog, we’ll explore what a TOD Deed is, how it works, and its advantages and disadvantages.
What Is a TOD Deed?
A TOD Deed is a legal document that allows the owner of a property to name a beneficiary who will become the owner of the property upon the owner’s death. This type of deed is a way to transfer property without having to go through probate, which is the legal process of administering a deceased person’s estate.
How Does It Work?
To create a Transfer on Death Deed, the property owner must fill out a legal form and file it with the county recorder’s office where the property is located. The form must include the property owner’s name, the name of the beneficiary, and a legal description of the property. The TOD Deed must also be notarized and signed by the property owner.
Once the TOD Deed is filed, it does not transfer any ownership rights to the beneficiary until the property owner dies. At that point, the beneficiary must provide proof of the property owner’s death and file an affidavit of survivorship with the county recorder’s office. Once the affidavit is filed, the beneficiary becomes the owner of the property.
Advantages of a Transfer on Death Deed
One of the main advantages of a TOD Deed is that it allows you to transfer ownership of your property without going through probate. Probate can be a lengthy and expensive process, and it can tie up your assets for months or even years. With a TOD Deed, your beneficiary can become the owner of the property quickly and easily after your death.
Another advantage is that it allows you to retain full control of your property while you’re alive. You can sell, mortgage, or give away your property as you wish, and the beneficiary has no legal claim to the property until you die.
This Deed can also be a useful tool for estate planning. If you have multiple beneficiaries, you can name them all on the TOD Deed and specify how much of the property each beneficiary will receive. This can help avoid disputes among your heirs after your death.
Disadvantages of a Transfer on Death Deed
One potential disadvantage of a Transfer on Death Deed is that it is only effective for transferring real property. You must use other estate planning tools to transfer other types of assets like bank accounts or investments. You cannot transfer these assets using a TOD Deed.
Another disadvantage of a Transfer on Death Deed is that it is irrevocable. Once you file the TOD Deed, you cannot change your mind and transfer the property to someone else. If you want to change the beneficiary, you will need to create a new TOD Deed.
It’s also important to note that a TOD Deed does not protect your property from creditors or from the Medicaid estate recovery program. If you have unpaid debts or if you receive Medicaid benefits, your property could be subject to liens or claims from creditors or the government.
TOD Deed Planning Tools
If you’re considering a Transfer on Death Deed, it’s important to consult with an estate planning attorney who can advise you on the best estate planning tools for your situation. They can help you weigh the pros and cons. They can guide you in deciding whether it’s the best option for your estate plan.
Consulting with an attorney is essential. Discussing your estate planning goals with your family and beneficiaries is equally important. They should be aware of your plans for your property and help avoid misunderstandings and disputes after your death.
Finally, it’s important to keep your Transfer of Death Deed up to date. If you sell the property or want to change the beneficiary, you will need to create a new TOD Deed. You should also review your Deed periodically to make sure it still meets your estate planning goals.
A TOD Deed can be a valuable tool for transferring real property to your beneficiaries without going through probate. It offers several advantages, including avoiding probate and allowing you to retain full control of your property while you’re alive. However, it’s important to understand the disadvantages as well, such as its irrevocability and limited applicability to real property only. Consult with an estate planning attorney before considering a TOD Deed. Review your estate planning goals with your family and beneficiaries to ensure alignment. Taking these steps ensures that you transfer your property to your beneficiaries according to your wishes.