MEMORANDUM TRANSFER ON DEATH DEEDS by Thatcher Law Firm

The Transfer on Death Deed (TODD)

TODD, which became available on August 1, 2008, is a new estate planning tool. It allows the transfer of real estate at the death without a will or probate proceeding, and is similar to a pay-on-death (POD) bank account.

This deed must be recorded prior to the death of grantor, does not take effect until the grantor's death, and is revocable at any time up until the grantor's death. It names one or more beneficiaries who will take title upon the grantor's death, but conveys no current interest in the property.

It is different from a joint tenancy because the grantee has no rights in the property until the grantor dies. It is different from a life estate, because the grantor can revoke it without the grantee's consent or signature.

It is similar to a will in that multiple or successor beneficiaries can be named, and the statute governs who takes title if the named beneficiary dies before the grantor. The beneficiary does not have to consent to the TODD or even be aware of it. A TODD cannot be revoked by a will, but can be revoked by another TODD or a current sale or gift of the property.

A TODD makes sense for people who have a small estate and a want to give it to one or a few people, and who want to retain control of their assets but still avoid probate. However, unintended consequences can arise when multiple, class or successor grantees are named and some die before the grantor. It is best to have an attorney draft the document.

Advantages of a TODD:

• Grantor retains total control over the property during his or her lifetime, including the right to live there, and sell to a third party.

• Grantor can revoke the TODD at any time prior to death.

• Since it does not take effect until the grantor's death, it is no effect on the grantor's homestead status, and there is no gift tax consequence.

• The property will receive a step-up in basis for income tax.

• The TODD will eliminate the necessity of a probate proceeding for the property covered by the deed, unless it is necessary to determine the beneficiaries of a class gift.

Disadvantages of a TODD:

• The entire value of the property will be included in the grantor's estate at death and will be subject to estate taxes (depending on the size of the entire estate).

• A TODD will not protect the property from Medical Assistance claims or liens if the grantor or his/her spouse received Medical Assistance.

• TODDs do not work well when the grantor has a complex family or distribution plan.

• Unintended consequences may result if the grantee dies before the grantor, depending on the exact language used. For example, it makes a difference whether or not the words "if he survives me" are used.

• A probate proceeding may be necessary to determine the members of a class, such as ""to my grandchildren" if the specific names are not mentioned.

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MEMORANDUM TRANSFER ON DEATH DEEDS by Thatcher Law Firm

The Transfer on Death Deed (TODD)

Advantages of a TODD:

Disadvantages of a TODD:

Additional Articles