Transfer on death deeds, sometimes referred to as TOD deeds, are documents that allow a homeowner to pass their property to another person upon their death. This is an excellent tool for property owners to ensure their home is properly given away after their passing, while ensuring that the property is still entirely theirs throughout their life.
How Does It Work?
Before the homeowner’s passing:
- This document must be drafted, signed in front of a notary public, and recorded at the local Register of Deeds before the homeowner’s passing.
- The document must include information on the specific property to be given, as well as the individual who will receive the property, who is called the beneficiary.
- Until the homeowner’s passing, the beneficiary will not have any rights to the property. The homeowner will have the entire right to the property throughout their lifetime.
After the homeowner’s passing:
- The beneficiary must file a form to transfer the property to their name. Once this is done, the beneficiary will be the new owner of the property.
Benefits of Using a Transfer on Death Deed
- Avoiding probate: The home will not have to go through probate, which can be a lengthy and expensive process that many people try to avoid.
- Flexibility: The document is flexible, so the homeowner can revoke this deed or change the beneficiary at any time. The homeowner is the one entirely in control until they pass away.
- Cost-effective: A transfer on death deed is a very straightforward and simple way to transfer assets, making it highly cost-effective.
Disadvantages
- Not suitable for multiple beneficiaries: While it is possible to list multiple beneficiaries, it can get complicated when there are many people. Because of that, TODs are best for simple transfers to a single beneficiary, or when used in combination with another estate planning tool, such as a trust.
- No coverage for incapacity: The beneficiary only gets ownership of the property once the homeowner dies, so there is nothing that can be done if the homeowner becomes incapacitated or unable to care for the property themselves. The beneficiary would not be able to step in to sell the property, for example.
Considering a Transfer on Death Deed
If you are considering having a transfer on death deed drafted for you and your property, contact our legal team today for help. One of our skilled real estate attorneys can discuss your options and draft the proper documents to help ensure your assets are properly taken care of.