What is a TOD Deed? by Daniel Leininger

TOD Deed stands for “Transfer on Death Deed.”   A TOD Deed is to real estate what POD (“Pay on Death”) is to bank accounts.  One can set up a bank account and name “pay on death” beneficiaries.   When a person sets up a POD bank account (“account owner”), there are no restrictions as to the account owner’s use of the funds in the account.  In fact, the account owner can use all of the funds in the account and there may be no funds left at his/her death, but if any funds do remain, the remaining funds are payable to the named “pay on death” beneficiaries.  All the “pay on death” beneficiaries need do is present the financial institution with a death certificate showing the account owner’s death and the funds are immediately paid to them.  The great advantage is that all of this is accomplished quickly and without going through probate for the deceased account holder.

With the Transfer on Death Deed, the owner of real estate can have his/her attorney prepare a “Transfer on Death Deed” which names the beneficiaries who are to receive ownership of the real estate after the death of the owner.  The owner signs the Transfer on Death Deed and it is recorded in the county recorder’s office in the county where the real estate is located.  Once recorded, the owner is still free to do what he/she pleases with the real estate:  mortgage it for a loan, sell it, or transfer it in any way, all without the consent or even knowledge of the “Transfer on Death” beneficiaries.  If the owner owns the real estate at his/her death, then all the “Transfer on Death” beneficiaries need do is file with the recorder’s office an affidavit with the death certificate documenting the owner’s death, and the county records are changed to reflect the “Transfer on Death” beneficiaries as the new owners of the real estate.  Again, the great value is that the transfer of title to the real estate can be made to the “Transfer on Death” beneficiaries as soon as possible after the owner’s death and without the delay and expense of probate.

Spouses can together sign and record a “Transfer on Death” deed naming their children as the “Transfer on Death” beneficiaries.  Upon the death of one spouse, there are still no restrictions on the surviving spouse’s ability to deal with the real estate.  The surviving spouse can mortgage, sell, or otherwise transfer the real estate without the knowledge or consent of the “transfer on death” beneficiaries. 

Once a transfer on death deed is signed and recorded, the owner(s) can make any changes they want to the “transfer on death” beneficiaries.  To do so, all the owner(s) need do is sign and record a new transfer on death deed with the changes.  With respect to married couples, the surviving spouse can also change the transfer on death beneficiaries. 

The “Transfer on Death Deed” is a very valuable estate planning tool.   Transfer on death deeds are relatively inexpensive but may result in a huge savings in both time and money by the avoidance of probate.