New Transfer-on-Death Deed: When a TODD May Be the Right Estate-Planning Tool*

*This is the attorney’s personal blog. Nothing written herein constitutes legal advice. Access to this blog article doesn’t create attorney client relationship and should not be relied upon without consulting a competent attorney, who will be able to explain the exceptions and the nuances that would apply in each individual situation.

For many if my clients the family home is their largest asset—and the asset they are most concerned about passing on smoothly. Until recently, New York property owners had to rely on a will, a trust, or some form of joint ownership to direct what would happen to their home at death. New York is now one of the states that offers another option: the "transfer-on-death deed", commonly called a TOD deed or TODD.

An owner of real property located in the state of New York may now sign, witness and record a document naming the persons who will receive the property at the owner’s death. If the TODD is valid and remains in effect, the property passes to the named beneficiaries without requiring probate or administration in a Surrogate’s Court with respect to that property. [1]

For practical purposes, a TODD is similar in concept to a beneficiary designation or a payable-on-death designation form that a testator fills out on every bank account, brokerage account and retirement. Please remember that simply filing such forms circumvents probate or administration proceedings in a Surrogate’s Court with respect to these assets.

The owner records TODD now, but the beneficiary receives no present ownership interest. The transfer occurs only if the owner still owns the property when the owner dies.

A TODD can be an elegant solution in the right case. It is not, however, a substitute for a complete estate plan, and New York’s law is still new enough that careful drafting, execution, recording, and coordination with the owner’s will or trust are particularly important.

During the owner’s lifetime:

- The owner remains in full control of the property!

- The beneficiary’s consent is not required to sell, mortgage, lease, or otherwise deal with it!

- The beneficiary’s creditors cannot reach the property merely because the beneficiary is named in the TODD!

- The owner may change his/her mind and properly revoke it at any time!

The beneficiary need not sign or accept the TODD during the owner’s lifetime.

TODD is most useful if there is a single/widowed homeowner who wants the home to pass to one or more responsible adult beneficiaries, the home would otherwise be the principal or only asset requiring a probate proceeding, and the owner wants a simpler and less expensive probate-avoidance tool than funding and maintaining a revocable trust. It is not automatically better than a will or a revocable trust, and it cannot solve every family, creditor, Medicaid, tax, or incapacity-planning issue.

 

My practice includes evaluating, preparing, executing, and recording New York transfer-on-death deeds, as well as coordinating them a client’s estate plan. Before recommending a TODD, I review all the relevant information, including the current ownership structure, the intended beneficiaries, family and creditor concerns, etc.

 

If you would like to know whether a TODD is appropriate for your property and your estate plan, please fill out a contact form to schedule a consultation with me.

[1] New York Real Property Law § 424 effective July 19, 2024.