A transfer-on-death deed lets you transfer real estate that you own to your loved ones after you pass away without the need for them to attend probate court. An individual who wants to pass on real estate can benefit from this document, as they’ll know with certainty that their property will go to their designated beneficiary without a lengthy court process.
What Is a Transfer-on-Death Deed?
A transfer-on-death deed (a TOD deed or a TODD) is a document you can use to transfer real estate property to another person, multiple people, or an entity upon your death.
It resembles other real estate deeds, as it names the parties (the owner/grantor and the beneficiary/grantee) and provides a legal description of the property. However, a TOD deed has a notable distinction in that it only takes effect when the real estate owner passes away.
Unlike other real estate deeds, TOD deeds allow your real estate to remain yours during your lifetime. The property only passes to the named beneficiary when you die. During your lifetime, you can sell, mortgage, refinance, or rent out the real estate if you’d like.
While a transfer-on-death deed (a TOD deed or TODD) helps you pass on real estate to loved ones and avoid probate, a last will and testament is a more comprehensive estate planning tool to transfer assets upon your death. Note that a TOD deed takes priority over any last will and testament you’ve established.
How Does a TOD Work?
A property owner creates a TOD deed by describing the real estate they want to transfer when they pass away and designating a beneficiary. An owner can designate one or more beneficiaries and decide if the real estate will be evenly distributed or distributed by certain percentages.
As you create this kind of deed, you may designate alternate beneficiaries. This process can help you ensure you pass on your real estate in case the primary beneficiary dies before you.
A single person may create a transfer-on-death deed, but a married couple may also want to pass on their property when they both pass away. If a married couple creates a TOD deed with joint tenancy, the property will only be passed on to the grantee(s) after the death of the last surviving spouse.
If a TOD deed has debts, the new beneficiary will receive them. Once a property transfers after an owner’s death via a TOD deed, the beneficiary will be responsible for the following debts:
TOD Deeds vs. Lady Bird Deeds
You can use TOD deeds and Lady Bird deeds, also known as enhanced life estate deeds, to transfer a property to a grantee beneficiary upon your death. Both allow you to retain control over the property while you’re alive and pass the property on when you die.
Only five states currently recognize enhanced life estate deeds:
- West Virginia
Although TOD deeds and Lady Bird deeds are similar, note the following differences:
- A Lady Bird deed has roots in common law, while a TOD deed comes from a creation of statute.
- Lady Bird deeds can be drafted to contain or not contain a warranty of title, but TOD deeds can not contain a warranty of title.
- Lady Bird deeds usually provide a greater level of protection against issues that may arise with Medicaid eligibility upon a person’s death.
States That Recognize Transfer-on-Death Deeds
The following states recognize TOD deeds. Note that depending on where you live, a state may refer to this document as a beneficiary deed, a deed upon death, or a transfer-on-death instrument.
- Alaska *
- District of Columbia *
- Hawaii *
- Illinois *
- Maine *
- Nebraska *
- Nevada *
- New Mexico *
- North Dakota *
- Oregon *
- South Dakota *
- Texas *
- Utah *
- Virginia *
- Washington *
- West Virginia *
All states with an asterisk (*) have adopted the Uniform Real Property Transfer on Death Act (URPTODA). This act is intended to guide states as they create their own laws related to TOD deeds.
If you’re living in a state that doesn’t recognize this kind of deed, you may be able to avoid probate by transferring your property to a revocable living trust.
Advantages of TOD Deeds
Using a TOD to transfer real property has many benefits, including:
- You retain control. The property only passes to your beneficiary upon your death. Until then, you have full ownership and control over your property.
- It’s revocable. If you change your mind at any time, you have the right to revoke or revise a transfer-on-death deed or replace it with a new one.
- It’s easy to create. Creating this kind of deed is a relatively simple process, as you only have to include your name, your beneficiaries’ names, a legal description of the property, your signature, and the appropriate notarization.
- You won’t need a probate proceeding to transfer property. The major benefit of a TOD deed is your beneficiaries can take ownership of the property without going through the probate process. By avoiding probate with a TOD deed, your beneficiaries will save time and resources.
What to Include in Transfer-on-Death Deeds
Here’s some of the information you should include in a transfer-on-death deed:
- The name of the grantor/owner. Depending on your situation, you may name just yourself or yourself and your spouse as the grantor(s).
- The name of the grantee(s). If you name individual people as beneficiaries, ensure that you state their full legal names and not just their relationship to you. You can also choose a contingent beneficiary so the property passes to someone else if the primary beneficiary passes away before you.
- A property description. Include the exact legal description of the property as it appears in the existing deed.
- Special language. Add a statement stipulating clearly that the property will pass to the beneficiary upon the grantor’s death. This language is cardinal, as it’s what makes a TOD deed different from other deeds.
- Your signature. Include your signature in this deed.
- Witness signatures and notary provisions. Depending on your state, you may need to include witness signatures and/or notary acknowledgment on your document.
After you create the TOD deed, you should take it to the county clerk’s or recorder’s office in the county where you own your real estate for recording and pay the associated fee. The clerk will officially enter your deed into the county’s property records.
Transfer on Death Deed Sample
You can download our transfer-on-death deed form below, which is available as a PDF or Word file:
Frequently Asked Questions
What are the disadvantages of a TOD deed?
One disadvantage of a TOD deed is your property will still be subject to probate if your beneficiary is deceased upon your death unless you have an alternative estate plan.
Also, a TOD deed may not be appropriate to transfer your interest in a property if you’re a joint owner. Upon your death, the real estate will pass to the surviving joint owner.
What is the difference between POD and TOD?
A pay-on-death (POD) account is used to transfer money in a bank account to a beneficiary upon your death. After your death, the money will be automatically transferred to the beneficiary’s account.
A TOD deed is primarily for transferring real estate. Upon the grantor’s death, the beneficiary has to present certain documents to the relevant office, including a death certificate and proof of their identity, to get access to the property.
What is the difference between a beneficiary and transfer on death?
A beneficiary is a person who’s named in a document to receive an asset of value. Transfer on death is a document that transfers ownership of specified accounts and assets to another person.
When could it be beneficial to get a TOD deed?
You can benefit from a TOD deed if you:
- Own limited other substantial assets besides a home.
- Want to save money on expensive legal fees.
- Want to make modifications to the deeded property during your lifetime.
How can I revoke a transfer-on-death deed?
The simplest way to revoke a TOD deed is to create another document nullifying it. Specify the deed you want to revoke, obtain the signatures of all the property owners, and acquire the necessary notarizations. File your revocation at the same office where you filed the original TOD deed.
Another way to revoke a TOD deed is to transfer the real estate to another person during your lifetime. You can accomplish this goal by using a quitclaim deed. Once you’re no longer the current owner of the property, it won’t pass to the grantee at the time of your death.