Transfer-on-death deeds (TOD deeds) can be helpful estate planning tools. Also known as beneficiary deeds, these legal documents allow property owners to transfer any property still owned by them to their beneficiaries without having to go through probate.
Some see them as an alternative to transferring the ownership of properties into living trusts. But there are some important factors to be aware of.
How Do Transfer On Death Deeds Work?
As with living trusts, TOD deeds allow people to continue owning and controlling their property while they are alive. They can sell the properties if they want to, lease them, refinance them, or even give them away, and the TOD can be revoked or amended at any time.
The property owners are also responsible for maintenance, taxes, and mortgage payments. It’s only upon death that the property will be transferred.
Does New York Allow Transfer On Death Deeds?
Currently, there are thirty states in the U.S. that allow TOD deeds. Each state has a slightly different process for executing a TOD deed, but the general process is the same. New York does not allow transfer on death deeds for real estate or vehicles, but does allow them for stocks and bonds.
How to Get a Transfer on Death Deed in New York
1. Lawyer Drafts the TOD Deed
Estate planning and real estate attorneys can both draft TOD deeds that comply with state laws. It’s important that the deed contain language that clarifies it is a TOD deed that will not take effect until after the property owner’s death.
2. Name the Beneficiary
Just about anyone can be named the beneficiary on a TOD deed, including not just people but also businesses, organizations, and charities. When naming individual people, it’s best to name a contingent beneficiary, as well. Be sure to use given legal names rather than descriptions of relationships.
3. Describe the Property
The TOD deed must also describe the property clearly. A current description should be available on the sales contract, mortgage documents, or official property records. Be sure to consult with an attorney or a title company to ensure that the descriptions are transferred accurately between documents.
4. Sign the TOD Deed
Sole owners can sign TOD deeds alone. However, married couples must also have spouses sign either the deed or a waiver indicating that they have no objections.
If the property is co-owned, property owners can only designate a beneficiary for their share, and all co-owners will need to sign the deed. It will not go into effect until the last person who signed it dies. The beneficiary is not required to sign the deed.
5. Record the Deed
Finally, have the deed filed with the relevant land records authority. This may be a land registrar, county clerk, recorder’s office, or office of land records.
The Pros and Cons of TOD Deeds
TOD deeds aren’t for everyone. They’re good for people who want to avoid both probate and the risks associated with adding someone to the deed while they are still living. They are affordable to draft and can be revoked at any time.
However, there are idiosyncrasies when it comes to property distribution if there are many beneficiaries. In some cases, they can result in unintended outcomes.
Can a Transfer On Death Deed Be Contested?
As with virtually any kind of inheritance, a transfer on death deed can be contested. The TODD would be contested in New York probate court in the event someone wants to challenge the transfer.
How to Revoke a Transfer On Death Deed
In order to revoke a TOD deed, the estate owner will need to have a document drafted. The document can simply state that the deed be revoked, along with a signature. From there, the document needs to be notarized and filed with the county recorder’s office.
How a Lawyer Can Help With TOD Deeds
The laws surrounding TOD deeds are complex. The best way to ensure that a TOD deed will transfer property to beneficiaries in the intended way is to hire an estate planning lawyer to draft the document.
Instead of trying to create a deed yourself, hiring an attorney will ensure the best possible outcome.