A Transfer on Death Deed (TODD) allows the owner of real estate to execute a deed that names the beneficiary who will succeed to ownership of the real estate at the owner’s death. A TODD can be a useful estate planning tool because it allows the transfer of real property without the need of probate since title is not passed by a Will.
A TODD is validly executed if it is recorded in a county in which at least a part of the real estate is located and is recorded before the death of the owner. A beneficiary named in a TODD can be:
- an individual only,
- multiple individuals,
- a trustee of a living rust,
- a trustee of a testamentary trust or
- any other legally qualified entity.
The owner may choose to have multiple beneficiaries on the TODD. If so, upon the owner’s death, the beneficiaries will take title of the real estate as joint tenants, tenants in common or in any other form of ownership or tenancy that is valid under the law.
Generally, most married couples own real estate as joint tenants. If joint tenants want to transfer real estate by a TODD, then both joint tenants must execute the TODD; if only one does, the deed is ineffective. If joint tenants execute a TODD, the beneficiary only becomes owner of the real estate after the death of the last surviving owner. The execution of a TODD does not sever a joint tenancy unless the deed specifically states that it severs the joint tenancy ownership.
Not Considered A Gift
Since the beneficiary has no rights to the real estate until the owner’s death, the recording of a TODD does not create a completed gift so gift tax considerations do not need to be taken into account. This also means that the owner can revoke a TODD anytime during the owner’s life and, most importantly, the owner continues to retain all control of the real estate. If the owner revokes the TODD, the revocation must be recorded in the county in which at least a part of the real property is located and before the death of the owner.
Completing the Transfer
Upon the owner’s death, the beneficiary must survive the owner by at least 120 hours to succeed to ownership. Once owner, the beneficiary will be subject to any interests in the property including a mortgage, judgment or any other lien against the property. The beneficiary’s basis in the property will be its fair market value on the date of the owner’s death.
In order for the beneficiary to prove ownership of the property, the following documents must be recorded in the county where the real estate is located:
- Affidavit of Identity and Survivorship
- Certified Copies of Pertinent Death Certificates
- Clearance Certificate: legal description for the real property from the county agency indicating the release or continuation of any public assistance lien or claim