What is a Transfer on Death Deed, and Why Should You Consider One?

Estate planning can feel overwhelming, especially when it comes to ensuring your loved ones inherit property without unnecessary complications. One tool gaining popularity in many states is the Transfer on Death Deed (TODD). This relatively new concept, adopted by Texas in 2015, offers a straightforward way to transfer real estate to heirs while avoiding probate.

What is a Transfer on Death Deed (TODD)?

A Transfer on Death Deed is a legal document filed with the county records that specifies who will inherit your property when you pass away. Think of it as a simple, cost-effective alternative to creating a living trust—especially if the primary goal is to avoid probate for your home.

Here’s how it works:

1. You Decide the Beneficiaries: You designate individuals (e.g., your spouse and children) to inherit your property.

2. It Avoids Probate: Upon your death, the property automatically transfers to the named beneficiaries without the need for probate court.

3. It’s Flexible: You can revoke or update the deed during your lifetime, allowing for changes in circumstances or preferences.

Why Use a TODD?

For many families, the home is the primary asset that requires probate. By filing a TODD, you can avoid this process entirely. Let’s consider an example:

If you’re married, there’s a possibility that two probates could be necessary—one for you and one for your spouse. The TODD simplifies this by automatically transferring the property to the surviving spouse. Once both spouses have passed, the property can seamlessly transfer to your children or other designated beneficiaries, eliminating the need for additional probate proceedings.

The Benefits of a Transfer on Death Deed

1. Avoid Probate: By bypassing the probate process, you save time, money, and legal complications for your loved ones.

2. Simple and Cost-Effective: Unlike a living trust, a TODD is easier to create and requires minimal paperwork and expense.

3. Retain Control: During your lifetime, you remain the owner of the property and can sell, refinance, or update the deed as needed.

4. Protect Your Heirs: Ensures a smooth transfer of property while minimizing the chance of disputes.

Is a TODD Right for You?

A Transfer on Death Deed is an excellent tool for many estate plans, but it may not be ideal in every situation. Here are some considerations:

• Simplicity: If your estate is straightforward and your primary concern is avoiding probate for your home, a TODD is a great option.

• Complex Estates: For larger estates or those with multiple assets, a living trust might offer more comprehensive solutions.

• Flexibility: A TODD works best for individuals who want to retain control over their property during their lifetime.

Real-Life Example

Just this week, I worked with a client to create a TODD. By filing this document, we ensured that their property would pass seamlessly to their spouse and children without the need for probate. This simple step brought them peace of mind, knowing their family would avoid the legal and financial burdens of probate.

Conclusion

The Transfer on Death Deed is a powerful tool in an estate planning attorney’s arsenal. It simplifies the process of transferring property, avoids probate, and ensures your wishes are honored after you’re gone. Whether you’re planning for your spouse, children, or other loved ones, a TODD can provide an efficient and stress-free solution.

If you think a TODD might be right for you, consult with an experienced estate planning attorney to learn more and get started. Planning ahead today can save your loved ones time, money, and unnecessary stress tomorrow.