A Useful Tool: Transfer on Death Deeds

/ February 20, 2011

House - iStockA 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.

Beneficiaries

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

14 thoughts on “A Useful Tool: Transfer on Death Deeds

  1. My widowed mother would like to file a TODD (she did not re-marry). Which form do I file for a Transfer on Death Deed in MN? The Statutory form 10.8.4 (2011) or the Unmarried Grantor Owner form 10.8.1 (2011)? Also, what does the following statement mean? Should I check the box on the form that is associated with this statement?

    ” When effective, this instrument conveys any and all interests in the described real property acquired by the Grantor Owner(s) before, on, or after the date of this instrument”

    1. I would recommend using the Statutory form. Yes, you can check the box for “when effective, this instrument conveys any and all interests in the described real property….” that way you ensure that any subsequent interest your mother may acquire on the property will be transferred to the new owner. Your mother acquiring additional interest may not be likely, but at least the box is checked just in case.

      Thanks for your questions!

    1. Thanks for the question, Colleen. Unfortunately, I do not practice law in the state of Iowa, so it is best that you contact an attorney in Iowa with your questions regarding transfer on death deeds. My understanding is that Iowa does not allow TODDs.

  2. I am helping my friend with her Mother’s very small estate (she passed away 8/29/2011) – the only value is a home (in a depressed neighborhood and in need of repair). My friend is the oldest heir – she has 5 living siblings. All siblings have left it in her hands to handle the estate and property. Question – should she put the title in her name alone or in joint tenancy with all 6 siblings? They hope to sell the home (would be happy to get $120k – but would need to pay real estate commissions, etc.) don’t expect much left over to disburse between the siblings.
    Sincerely, Denise

    1. Hi Denise, Your friend should consult an attorney in private for legal advice on how to handle her mother’s estate. There are many more details regarding this situation that an attorney would have to know before recommending the best course of action. Good luck!

  3. I have 5 children from a previous marriage, My wife has 2 children from a previous marriage. We own one home. Can we use a TODD to distribute 50% of the home’s value to be shared equally among my 5 children and the other 50% to be shared equally among my wife’s 2 children? Thanks.

    1. Hi Matt, You should definitely consult an attorney in private for legal advice on how best to handle this. There are many details that would have to be discussed before an attorney could recommend the best course of action. Thanks for reading Epilawg. Good luck!

    1. Thanks for the question, Anthony. The owner continues to pay property taxes on the real estate. Once the owner passes away, then the beneficiary pays property taxes. For more details, contact an estate planning attorney in your area.

  4. You guys look fantastic!!! And I love the clever name Epilawg. I am trying to fill out the TODD form 10.8.1 and I want to specify a Grantee Beneficiary-A but in case he doesn’t survive me I want to specify Grantee Beneficiary-B. The form says: …Grantor Owner, hereby conveys and quitclaims to …. (“Grantee Beneficiary”). How do I Specify what I want in this context. Thanks.

  5. My husband has been deceased since 1995, and everything was left to me in his will. His mother had left him some property, that went to him on her death in 1994. I just never did have it put in my name for the warranty deed. Now I’m wanting to sell it, and not sure how to do it. Since my deceased husband can’t sign the warranty deed, how do I go about doing this? This is in Texas. Thanks.

    1. Thanks so much for your inquiry, Linda. Unfortunately, we are unable to provide specific legal advice on this site. We would definitely recommend that you contact an estate planning attorney in TX to help you with your specific situation. Thanks for visiting Epilawg!

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