Transfer on Death Deed. Thinking about updating your Will? You may consider removing real estate (to avoid probate) by executing a Revocable Transfer on Death Deed (TOD) instead. Often simpler to create than a Trust, a Transfer on Death Deed is similar to the Enhanced Life Estate Deed and is valid in Missouri, Kansas, Ohio, Arizona, New Mexico, Nevada, Colorado, Arkansas or Wisconsin.
A TOD is a real estate deed that allows you to designate a beneficiary to whom your real estate will pass when you die. Generally speaking, a valid Revocable Transfer on Death Deed works as follows:
How a TOD Works
(1) The deed must state prominently that no interest in the real estate is conveyed until after the transferor's death. The exact language differs from state to state usually necessitating a visit (or at least a phone call or an e-mail) to a competent estate planning lawyer. The deed does not need to be delivered to the beneficiary, but must be recorded prior to death to be effective as a transfer.
(2)The property passes outside of probate. The deed can be revoked at any time prior to death. The beneficiary has no present interest in the property as the property remains within the transferor's absolute possession, custody and control;
(3) The transferor's Will does not affect the transfer on death unless the beneficiary dies prior to the transferor;
(4) The property is subject to the transferor's creditor's claims but not the beneficiary's creditor's claims;
(5) The property remains taxable to the decedent's estate; and
(6) The beneficiary simply records a death certificate to effectuate a transfer.
The Transfer on Death Deed is similar to an Enhanced Life Estate Deed (or Lady Bird Deed) and the Beneficiary Deed. In addition to the states mentioned above, California is also considering a statute that would recognize the Transfer on Death Deed.
