What Is a Transfer on Death Deed?

In many states, you can create and file a simple transfer on death deed (also called a "beneficiary deed" or similar term in some states) that will leave your home or other real estate property to someone after you die. You'll keep your home out of probate.

How a TOD Deed or Beneficiary Deed Works

The transfer on death (TOD) deed or beneficiary deed looks similar to a regular real estate deed, such as the one that transferred the house to you when you purchased your home. The TOD deed names the current owner, designates the new owner at your death (the "beneficiary"), and identifies your property. However, unlike a regular deed, the transfer on death deed does not go into effect until your death. Until then, you still own your property, are free to sell it, are responsible for paying taxes on it, and otherwise maintain full control.

Benefits of Creating a Transfer on Death Deed

The greatest advantage to using a TOD deed is that if your estate will go through probate, your house will be protected from that costly and time-consuming process. (See Will Probate Be Necessary?) That can translate to significant cost savings. What's more, if your biggest asset is your house, keeping it out of probate might mean that your estate comes in under the threshold for "small estates," allowing your estate to skip probate altogether. For these reasons, even if you have an existing will, you might still consider using a TOD deed to address what happens to your home.

On the other hand, if you have a simple revocable living trust and you've transferred your home to the trust, you will not need a separate TOD deed. Property placed in a living trust will be distributed according to the terms of the trust, and will not go through probate.

Apart from avoiding probate, the transfer on death deed also has these benefits:

• It's simple to create. Many states have written forms (known as "statutory forms," because the form is set out in the law that establishes TODs) that you can use to create your TOD deed, by simply filling in the blanks. You simply fill out the form, sign it in front of a notary, and file it with your county land records office (the office in your county that records real estate deeds, often called the recorder's office or the register of deeds).
• It's inexpensive to create. If you create the TOD deed yourself, you'll need to pay only the notarization cost and a small recording fee. Some private companies also offer fill-in-the-blank forms or guided software programs at a small cost. Even if you do use a lawyer to make a TOD deed, the fee should be significantly less than what it would cost to have a lawyer create a living trust.
• You can revoke the TOD deed at any time. It's also easy to revoke the TOD deed, or to file a new one, should you change your mind about the beneficiary.

Which States Allow Transfer on Death Deeds?

More than half of the states allow TOD or beneficiary deeds, and the list is growing. So if you don't see your state below, you might still want to keep your eye on developments in this area. The relevant state to check is the state where your property is located.

These are the states that currently allow TOD deeds:

How to Create a TOD Deed

If you want to create a TOD deed yourself, you have a few options.

State Statutory Forms for TOD Deeds

Some state statutes lay out out the exact language to use in a transfer on death deed. In effect, the statute statute provides a template, which you can fill out to make a TOD deed. For example, the Kansas statute suggests the following wording:

___(Insert name of owner)___ as owner transfers on death to ___(insert name of beneficiary)___, as grantee beneficiary, the following described interest in real estate: (insert description of the interest in real estate). THIS TRANSFER ON DEATH DEED IS REVOCABLE. IT DOES NOT TRANSFER ANY OWNERSHIP UNTIL THE DEATH OF THE OWNER. IT REVOKES ALL PRIOR BENEFICIARY DESIGNATIONS BY THIS OWNER FOR THIS INTEREST IN REAL ESTATE. (Kan. Stat. Ann. §59-3502.)

Most of the state statutory forms are slightly longer than this but are similarly simple in content. Some forms also allow further options, like designating an alternate beneficiary to receive the property if your first-choice beneficiary does not survive you.

DIY Products for Transfer on Death Deeds

If you'd rather not research the state statute yourself, or if you'd like a little extra help along the way, try a reputable product such as Nolo's bestselling Quicken WillMaker, which allows you to make TOD deeds specific to your state. (It can also help you make other estate planning documents, such as a will, living trust, health care directives, powers of attorney, and more.) The guidance from a product such as WillMaker is much more user-friendly than a bare statute, and will spell out the steps you need to take when signing, getting notarized, and filing your deed.

Finalizing Your TOD Deed

Once you've drafted the TOD deed, you'll have to sign it in front of a notary, and then file it with the county land records office. If you don't file the deed, it won't be valid. And even if you've precisely copied the language from your state's statutory form, be sure to check with your county's land records office before printing your form, and ask whether your county has special formatting requirements (such as extra margin space or a blank box at the top right corner).

Using a Lawyer

A lawyer can also help you draft a TOD deed and might be especially useful if you're dealing with a more complicated situation—for example, if you own the property with another person and have questions about how a TOD deed will work with your co-ownership situation.

How to Revoke or Change a TOD Deed

If you change your mind, it's easy to revoke a TOD deed. The process is very similar to the process for filing a TOD deed: You'll simply sign and notarize a revocation, and then file it with the county land records office. Again, many states offer statutory revocation forms. Here's typical sample language, excerpted from New Mexico's statute:

IDENTIFYING INFORMATION

Owner or owners of property making this revocation: (insert owner name and address)

Legal description of the property: (insert legal description)

REVOCATION

I revoke all my previous transfers of this property by transfer on death deed.

(N.M. Stat. Ann. § 45-6-417.)

It's also possible simply to file a new TOD deed that names a different beneficiary, as the most recent TOD deed on file will be the one that takes effect. But to avoid any potential confusion, it's best to file a revocation. Also be aware that you cannot revoke a TOD deed by naming a different beneficiary in your will—it won't have any effect. You must file either a revocation or a new TOD deed with the county land records office.