Transfer on Death Deeds Help Avoid Probate

Dennis M. Horn (attorney and partner, Washington, D.C.) and Susan N. Gary (professor of law, University of Oregon) have published their article Death Without Probate: TOD Deeds–The Latest Tool in the Toolbox, Prob. & Prop., March-April 2010, at 13. 

An excerpt from the article is below:

The latest tool in the probate avoidance toolbox is the Transfer on Death Deed (“TOD Deed”).  A TOD Deed allows the owner of real property to execute a deed that names a beneficiary who will succeed to ownership at the owner’s death.  Because the TOD Deed creates no rights in the beneficiary until the owner dies, the owner can change his or her mind during life, and the beneficiary’s creditors cannot attach the beneficiary’s interest in the property during the owner’s life.  The recordation of the TOD Deed also does not create a completed gift for gift tax purposes because no transfer of ownership takes place until the owner dies.

Thirteen states have adopted TOD Deed statutes.  In July 2009, the National Conference of Commissioners on Uniform State Laws approved the Uniform Real Property Transfer on Death Act.  This new act will likely lead additional states to consider the TOD Deed.  This article examines some of the circumstances in which the TOD Deed and other probate avoidance tools might be used productively in estate planning.  The article also examines some of the conflicting interests that emerged in crafting the Uniform Real Property Transfer on Death Act . . . .