Many property owners would prefer to avoid the whole probate process when arranging to pass on a piece of property to another after they’ve died. One tool at their disposal is a transfer-on-death (TOD) deed.
These deeds frequently grant real estate ownership to a primary or secondary beneficiary. While each state has specific rules, creating a TOD deed is fairly simple and uncomplicated.
Simply put, a TOD deed, also known as a beneficiary deed, gives homeowners the right to transfer their property ownership to one or more beneficiaries upon death. Their designated beneficiaries can include anyone from a family member to a charity or organization. After the current owner passes, the beneficiary becomes the new owner of the property without worrying about going through the probate process.
For many people, unless there is also a co-owner, it’s somewhat challenging to transfer your real estate property over to a beneficiary without going through probate. While one could always place assets into a living trust to avoid probate, setting up a TOD deed is a much easier and more cost-effective alternative. Plus, they offer several other advantages.
For one, since property transfer doesn’t occur until after death, a TOD deed is not subject to a gift tax. That saves your beneficiaries significant money.
In addition, TOD deeds also include somewhat flexible and revocable terms. It’s simple to revoke the document if it’s no longer needed or the name of the beneficiary changes. After submitting a revocation form, all it takes is a new TOD deed with a new beneficiary named.
Similar to most real estate deeds, TOD deeds must follow particular state regulations and contain the names, signatures, and specific property details of both the grantor and beneficiary. In addition, before the grantor passes away, the TOD deed must also be notarized and registered in the same county as the real estate.
Currently, only property owners in 27 states are eligible to create some TOD deed.
These states included: Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Illinois, Indiana, Kansas, Maine, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Ohio is not listed because they switched from TOD deeds to transfer-on-death designation affidavits in 2009. Although identical and used for the same things, Ohio’s TOD forms include specific updated rules.
Submitting a TOD form isn’t that difficult. There are five basic steps to the process.
A TOD deed is a straightforward and affordable way to transfer real property ownership without going through probate. Even then, the TOD deed or affidavit must adhere to all state laws and regulations. As with any real estate deed form, it’s a good idea to seek legal counsel to help protect you and your beneficiaries.
Contact the estate planning attorneys at Heban, Murphree & Lewandowski, LLC for more information. We can discuss your situation with you and decide which solutions are ideal for transferring property ownership. Call our law office right away to set up a consultation. 419.662.3100