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3 times to consider drafting transfer on death deeds

On Behalf of | Jan 31, 2025 | Estate Planning

There are many ways to address real estate when establishing an estate plan. Some people include their homes in their wills. Others transfer their homes or other real estate holdings to a trust. For some people, a transfer on death deed (TODD) is the best option available.

A (TODD) is a document drafted by a property owner to address their real estate holdings after their passing, often as part of a comprehensive estate plan. The beneficiary designated as the new owner of the property can record the deed when they have proof that the current owner has passed. They can quickly establish residency at the property if they do not already live there.

What types of circumstances might make transfer on death deeds the best estate planning solution for a property?

1. When testators want to keep the home out of probate court

There are several reasons why people may want to limit what property passes through the probate courts after they die. Perhaps they worry about creditors or Medicaid making a claim against the estate.

Another common concern is that the total value of an estate could potentially trigger estate taxes. Executing a TODD allows a testator to arrange for the transfer of their real estate holdings outside of the probate process.

2. When testators want to keep their plans simple

Creating and funding a trust can be a reasonable solution for real estate holdings in many circumstances. However, people in a variety of situations may be averse to the idea of establishing a trust.

Perhaps they want to avoid the expense involved, or maybe they worry about the challenges of naming a trustee. TODDs can be a viable alternative to trusts when people want to arrange for the rapid transfer of real estate after their passing without relying on a trust.

3. When testators do not want to give up control yet

There are several kinds of deeds that people use to address real property in their estate plans. Some people execute deeds to take on a joint tenant who has rights of survivorship. That can be a viable arrangement when sharing a home with a spouse, romantic partner or adult child who acts as a caregiver.

Still, such arrangements diminish the legal authority the current property owner enjoys. Executing a TODD instead of taking on a joint tenant or co-owner while still alive is a viable alternative for those who do not want to limit their control of their property immediately.

Reviewing different estate planning tools for addressing valuable assets can help people develop the most effective plan given their personal resources and concerns. Transfer on death deeds may be a valuable addition to an estate plan if an individual owns real property.

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