A Minnesota law became effective on August 1, 2008 – which allows a person to transfer property upon their death by filing a Transfer on Death Deed (TODD). Although this has been around for a while now, it hasn’t been used very often. Because of this it is not very well understood. The purpose of this title tip is to make you aware of its existence – so you can inform your customers that this may be an option to consider.
A TODD must be recorded during the lifetime of the owner to be valid, but the transfer of real estate becomes effective only after the death of the grantor owner. The property passes to the beneficiary as non-probate property, without the disadvantages of using a joint tenancy or life estate deed. And during the lifetime of the grantor owner, they retain control over the property. The owner is free to “change their mind” and revoke the recorded TODD, name a new beneficiary, or sell the property outright to another party. A designated beneficiary has no rights to the owners’ property during the owners’ lifetime.
There are many factors to consider when an owner starts planning for the disposition of their assets when they pass away. A life estate, or a joint tenancy ownership are options that are frequently used for this planning. A Transfer on Death Deed is another option that your customer may want to consider. Because it is relatively new, many people are not aware of its existence – or the difference that this option has compared to a joint tenancy or a life estate.
And be aware that this is not a wise “do it yourself” option for someone who is not trained and well informed in this area. There are different transfer forms to use depending on if the grantor owner is single, married but the sole party in title, married and in title as joint tenants or married but in title as tenants in common. And the effect of this deed on estate taxes, creditors, and outstanding mortgages etc, needs to be understood. As a title company we FREQUENTLY see situations that are made worse by a party that creates and files their own deeds – only learning the hard way that it’s not as simple as they thought.
Disclaimer – this information is NOT legal or financial advice, and should not be used as a substitute for the same. It is offered for informational purposes only. Many different factors can influence the proper course of action for a particular situation. Please seek the advice of a qualified professional for guidance with your specific transaction.