A transfer on death deed is a deed transferring real property to a grantee, and upon such grantee’s death, the property is transferred to a beneficiary. A transfer on death deed is used by most people to avoid probate. In most cases of transfer of death deeds, the grantor and grantee are one and the same person, while the person given the property after the grantor/grantee’s death is the grantor/grantee’s child. In New York, transfer on death deeds are not allowed for real property, but allowed for securities and brokerage accounts.
Many people use transfer on death deeds because it avoids probate, is revocable prior to the owner’s death, and provides a quick transfer of real property after death.
A transfer on death deed avoids probate. It uses a simplified process of transferring real property at the death of the owner. This usually requires the submission to the county recorder of a death certificate and an affidavit of the remainder beneficiary. Without such deed, real property is transferred after the death by means of a more expensive probate process, which requires the filing of a petition with the court.
The main advantage of a transfer on death deed over a survivorship deed is revocability. In a survivorship deed, once executed, it is irrevocable without the consent of all the co-owners, even if only one co-owner paid for the property. In transfer on death deeds, the deed can be revoked by the execution of a new deed, without needing the consent of the remainder beneficiary.
Some disadvantages of a transfer on death deed are the non-recognition of the deed in some states, the lack to nominate alternate beneficiaries, and inflexibility to adapt to contingencies.
Not all states recognize transfer on death deeds. In fact, New York does not allow it. When determining whether to execute a transfer on death deed or not, check the laws of your local jurisdiction to see what is allowed. The following states recognize transfer on death deeds:
In transfer on death deeds, you cannot nominate alternate beneficiaries. So in case the designated beneficiary dies before the owner, the property goes back to the estate of the owner and will require probate proceedings in order to be transferred.
Issues may arise in unforeseen cases such as incapacity, disability, and minority.
For example, when the grantor/grantee becomes incapacitated, the transfer on death deed cannot be revoked anymore unless the grantor/grantee has previously executed a durable power of attorney. When the deed cannot be revoked, the property cannot be sold to spend for the incapacitated person’s expenses.
When the beneficiary is disabled, the property will form part of his estate for purposes of determining eligibility for government benefits.
When the beneficiary is a minor, the property cannot be given to the minor without the appointment of a legal guardian.
These contingencies cannot be addressed by an inflexible transfer on death deed, but remedies may be given if the property was under a revocable trust.
Transfer on death deeds are an estate planning tool used by some states to immediately transfer property after the death of the decedent, avoiding probate. Should you need assistance in estate planning matters, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].