{"id":2935,"date":"2023-04-24T10:00:00","date_gmt":"2023-04-24T14:00:00","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=2935"},"modified":"2024-07-22T22:55:16","modified_gmt":"2024-07-23T02:55:16","slug":"the-transfer-on-death-deed-is-it-always-simpler-than-probate","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/the-transfer-on-death-deed-is-it-always-simpler-than-probate\/","title":{"rendered":"The Transfer on Death Deed: Is It Always Simpler Than Probate?"},"content":{"rendered":"\n
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Passing property along when you no longer live in it shouldn\u2019t be a huge hassle. And that\u2019s why an increasingly popular choice is the transfer on death deed<\/em><\/a>. This is a real deed, which designates a beneficiary on the real estate title.<\/p>\n\n\n\n

If you have a beneficiary in mind, and you aren\u2019t already co-owners with rights of survivorship<\/a>, the transfer on death deed is a simple option in any state that offers it. But is it perfect for every homeowner? Probably not. Let\u2019s look at how it works \u2014 and its possible drawbacks.<\/p>\n\n\n\n\n\n\n\n

Will Versus Transfer on Death<\/h2>\n\n\n\n

You\u2019re a homeowner. You want to name a certain person to get your home after your death. One way to do this is to write a will<\/a>. To transfer a home through a will means putting the home into probate. That\u2019s a court-led process to distribute the assets of someone who has died. Because it\u2019s public and takes up time and resources, some people prefer to avoid it. But wills are simple to write and can be used in every U.S. state.<\/p>\n\n\n\n

In some states, residents have the option to sign and record a transfer on death deed<\/em> (sometimes abbreviated to TOD deed<\/em>, or just TODD<\/em>). The point is its simplicity after <\/em>you\u2019re gone. Think about passing your home along in the same way you\u2019d pass along a bank account \u2014 by naming a beneficiary. In fact, the TOD deed is called a beneficiary deed<\/em><\/a> in many locations.<\/p>\n\n\n\n

You\u2019ll fill out the TOD deed document, and then record it in the same county as the home. Note: Unlike a will, an unrecorded TOD deed will do nothing. But if your TOD is in the public records, assuming your debts can all be paid by your estate, the named beneficiary will receive your home title after you pass. Your beneficiary will file the document with the recorder of deeds as public notification of their new ownership.<\/p>\n\n\n\n

In short, if your state is among the majority of U.S. states that has adopted the TOD deed, you may use it to leave the home to anyone you\u2019ve designated as your beneficiary, without putting the real estate in probate the way a will would. So far so good.<\/p>\n\n\n\n

Now, the TOD deed has something in common with a quitclaim. That is, it\u2019s not a warranty deed! Just because you pass your own rights on to someone else, doesn\u2019t mean your own title is free and clear. If a TOD deed becomes effective under a state\u2019s law, for a certain time (such as two years from the date of the homeowner\u2019s death), creditors can still make claims on the home.<\/p>\n\n\n\n

Of course, a home can get hung up in probate, too, before the court generates a free and clear deed. Wills can be contested. So, is the TOD deed the stronger document? Maybe so, if you fill out that document with conviction, record it, and never change your mind.<\/p>\n\n\n\n

But life takes some interesting turns. And documents left after someone\u2019s life can cause confusion.<\/p>\n\n\n\n

The TOD Deed Is Not Foolproof: Confusion Alert!<\/h2>\n\n\n\n

Consider an Ohio homeowner who died, leaving a TOD deed naming someone she no longer had any relationship with.<\/p>\n\n\n\n

She did remember to change her will, and her power of attorney, after the relationship ended. But her wills and estates lawyer neglected to ask about the old TOD deed, and never created, signed, and recorded a new TOD for a new beneficiary.<\/p>\n\n\n\n

When she died, the deed went to the ex-friend. You know \u2014 the friend she purposefully cut out of her will.<\/p>\n\n\n\n

The ex-friend\u2019s ownership rights did meet a challenge \u2014 but the court decided the TOD deed was fine. The appeals court said: Not so fast! Noting the lapse by the deceased homeowner\u2019s lawyer, the appeals court sent the case back to the trial court to examine all the evidence pointing to the deceased person\u2019s true wishes.<\/p>\n\n\n\n

What could have prevented this confusion? While still alive, the homeowner needed to remember to change the beneficiary named on the TOD deed. Because a TOD deed has no effect during the homeowner\u2019s lifetime, the homeowner may revoke it \u2014 any time the homeowner wishes.<\/p>\n\n\n\n

The formalities are simple, but they must be followed. A TOD revocation must be a new, written document. The homeowner must record it with the city or county recorder of deeds.<\/p>\n\n\n\n

Or, the homeowner can always sell the home. That cancels the TOD \u2014 which has no legal meaning at all as long as the person who created it is alive.<\/p>\n\n\n\n

Other Possible Challenges to a Beneficiary Deed for Real Estate<\/h2>\n\n\n\n
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Could someone else who wanted to get your home challenge your beneficiary? Certainly. People can claim that a mistake was made, or fraud was involved, or you were pressured to sign the TOD document.  Undue influence is a common claim against most any type of estate plan.<\/p>\n\n\n\n

Imagine coming to depend on someone else for assistance as you grow older. You might decide to create new estate documents, and one might be a beneficiary deed.<\/p>\n\n\n\n

When you are no longer around, a relative or some other interested party could claim that your assistant improperly influenced you to sign over your property. A challenged TOD deed has to be fought out in probate court.<\/p>\n\n\n\n

What signals could show you were under someone else\u2019s inappropriate influence, according to the courts? Generally, the signs could look something like one or more of these:<\/p>\n\n\n\n