Death Without Probate: TOD Deeds – The Latest Tool in the Arsenal
Although probate can be expensive and time consuming, avoiding it can be complicated. The challenge has been to fashion flexible legal tools to allow individuals to transfer property on death while preserving the individual's right to change his or her mind during life. The latest tool in the probate avoidance arsenal is the Transfer on Death Deed (TOD Deed).
A TOD Deed allows the owner of real property to execute a deed that names the 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.
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 (Uniform 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 Act. To read the full article, please click on the link below.