One of the greatest benefits of prudent estate planning is the level of convenience that you and your loved ones are afforded. The nature of convenience rings true with this valuable piece of estate planning. Here, we’ll answer the question of, “what is a transfer on death deed?”

A TOD deed is a smart way to transfer ownership after one’s passing: a beneficiary or beneficiaries are designated to automatically assume ownership of the property upon the current owner’s death.

Despite any indications of transferred ownership that can be made in a will, probate is still a part of the typical process for transferring assets and property. In probate, the transfer of ownership must be validated in court. However, probate becomes no longer necessary with a TOD deed, ensuring your beneficiary or beneficiaries a smooth transfer that saves time and money.

It’s important to note that the chosen beneficiary needs to be designated by name rather than relationship to the owner. If two or more beneficiaries are designated, their title must be stated, usually “as joint tenants with rights of survivorship” or “as tenants in common.” For thorough preparation, an alternative or successor beneficiary can be designated if the first beneficiary dies.

A TOD deed can be made for property only in states where allowed. Currently, over half of the United States allows TOD deeds, including the state of Illinois. Bear in mind that the current owner doesn’t have to reside in the state where the property is situated in–only the property need be titled in a state that allows TOD deeds.

Property outside of states that allow TOD deeds may be transferred more easily via other methods to avoid probate, such as transferring property to a living trust. 

How Do I Create a Transfer on Death Deed?

First, gather any forms or information necessary for creating the TOD deed where your property resides. The TOD deed, like most legal documents, uses a legal style of writing that is best drafted by a competent attorney. This legal language indicates the name of the beneficiary and that the title will be transferred upon the current owner’s death.

Then, include some basic personal information as you would with any other estate deed. These pieces of information include name of current owner (known as the grantor), name of beneficiary (known as the grantee), description of property, signature of current owner, and witness and notary provisions required by law.

Married couples may hold or create TOD deeds as well, which makes transfer of ownership just as convenient. In the case of one spouse’s death, the other spouse automatically becomes the owner. The surviving spouse can let the TOD deed stand until death and let property ownership transfer to a stated beneficiary, or the surviving spouse may revoke the TOD deed.

Last, have the TOD deed recorded in your county’s property records before the death of the current owner to ensure the deed is valid. The TOD deed will only apply to property in the county where the deed is recorded. By bringing your TOD deed into your local county public records office and paying for the appropriate service, your TOD deed will be entered into the county’s records.

Should I Get a Transfer on Death Deed?

While probate is costly and time-consuming, avoiding it may not be the optimal choice in every situation. A discussion with a knowledgeable attorney will clarify whether or not avoiding probate is right for you.

In addition to the primary advantage of an easier, probate-free process for transfer of property upon death, a TOD deed guarantees other benefits regarding matters including joint ownership, taxes, maintenance of homestead advantages, and maintenance of Medicaid eligibility.
To be certain that your estate planning is carried out correctly and effectively so you and your loved ones enjoy all of the advantages of a TOD deed, speaking to an experienced estate planning attorney is in your best interest. Schottler & Associates offers a free 30-minute consultation by appointment. Contact us to set up your free consultation so you can get the answers you need.

Mark Schottler is a Chicagoland attorney with over 20 years of experience working both in probate and estate planning law and in real estate law. He puts his extensive knowledge on these subjects into easily consumable articles that will help and advise the public. Mark Schottler has a passion for probate and uses this to create relevant articles that are informative and entertaining. *While these posts may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.