Avoiding probate can save time, money, and aggravation for your heirs. There are several ways to avoid probate. If you have real estate and want to transfer it to a beneficiary without going through the probate process, the best way may be with a transfer on death deed.
What a Transfer on Death Deed Does
Essentially, a transfer on death deed (TODD) is a beneficiary designation for real estate. It conveys real estate to one or more “grantee beneficiaries.” It is like a payable on death designation on a bank account. The beneficiary only takes ownership upon the death of the owner.
The grantee beneficiary is the person to whom the property is being conveyed. It can be people or an entity, like a revocable living trust or business. A TODD is specific to the piece of real estate that is described in the deed. This means that a TODD is needed for each piece of real estate that you own.
This also means that if you record a TODD for real estate that you own now, and you buy additional real estate in the future, you need to record new TODDs for the additional real estate.
Risks and Problems with Using a TODD
There are some potential risks to using transfer on death deeds. As with any type of deed, it is extremely important that you have an accurate and complete legal description for the property. Without it, the deed may not be effective.
Additional risks come from transferring real estate to more than one grantee beneficiary.
These risks include: