How the Beneficiary Claims a Transfer on Death Deed

A transfer on death deed is designed as a simpler way to pass a home along to someone else—in states that allow these deeds. With the TOD deed, a home passes much the way a bank account passes to the account holder’s named beneficiary.

Ownership is transferred in a fast and inexpensive manner. Usually.

Here are the basics—and a few words about the exceptions.

No Probate Required, but Formalities Can’t Be Skipped

A TOD deed differs from a will in that it bypasses the probate process. A TOD deed beneficiary has ownership of the home at the time of the TOD deed creator’s death.

That said, the beneficiary can expect to take some steps to formally effect the transfer. The beneficiary needs to have a copy of the TOD deed or obtain one from the county deed recorder’s office.

Also needed is a certified copy of the death certificate of the person who created the TOD deed. This can be obtained from the department of vital records in the state where the creator of the deed passed away.

Depending on the state and county where the home is located, the county clerk’s office will usually file a sworn affidavit, attached to the death certificate. This “notice of death” affidavit (a.k.a. affidavit of identity and survivorship) declares:

• The name of the person making the sworn statement, identifying the person as a beneficiary.

• A reference to the creator of the TOD deed, its original date, and its instrument number.

• A reference to the date of the death of the creator of the TOD deed.

• The home’s county, state, and address.

• The legal description of the home.

• The date the affidavit is signed before a notary.

Some states need the affidavit to declare the fair market value of the home at the date of the late owner’s death. Some need it to state the beneficiary’s address.

Under state law and county rules, the beneficiary may need to file a real estate change of ownership statement and certification of occupancy status. And if anyone was named on the TOD deed but has since passed away, a death certificate will also need to be presented for the individual(s).

To get started, see our guide to the transfer on death deed.

Medicaid and Other Lien Stories

A TOD deed effects an immediate transfer of property, but that doesn’t mean it bypasses Medicaid recovery.

The county where the death occurred will need an application for Medical Assistance Clearance. This triggers a search to learn whether the deceased, as well as any possible deceased spouse, had received Medicaid funds. If so, expect the government to record a 10- or 20-year medical assistance lien against the title. If this occurs, the lien has to be satisfied, or the home will be unmarketable.

And speaking of liens, the named beneficiary is responsible for resolving debts on the property, such as property taxes and mortgages or other liens. In some states, this can be a bigger issue than in others. Consider California, which imposes a waiting period after the property owner dies. While the beneficiary waits to receive the home, creditors and potential heirs are informed that they may challenge the TOD. For a three-year period, the beneficiary won’t be able to get title insurance—a necessity when financing or selling a home. The waiting and notification requirements can be messy. A revocable living trust may therefore be a better way to transfer a California home.

After Clearance, How Does a Beneficiary Sell the Home?

The beneficiary will want to spruce up the home for sale and get it listed on the market. The usual way is to contact a reputable real estate agent for guidance. There is always the option of going with a company that buys homes for cash and fixes them up for sale, such as Opendoor, or a reputable local alternative.

Key professionals to consult include:

• A title insurer, to verify that the change of ownership went through and that there are no outstanding claims needing resolution.

• A real estate agent, to guide pricing, marketing, and negotiations with potential buyers.

• A tax pro, to help navigate federal, state, and local implications.

If you are creating or receiving a transfer by TOD, or simply TOD-curious, use the information above as a springboard for your own due diligence. Deeds.com is not a provider of legal advice. State laws on transfer on death deeds can change, and each state has its own approach. Rules are also county-specific.