How to Use a TOD or Beneficiary Deeds to Avoid Probate

These deeds make real estate a non-probate asset in some states

Florida Enhanced Life Estate Deed

transfer-on-death (TOD) deed, also known as a "beneficiary deed," is a special type of deed that can be used to transfer ownership of real estate outside probate in a growing number of U.S. states. 

How Transfer-on-Death Deeds Work 

If you own real estate in your sole name without a co-owner, you have limited options if you want to pass the property to a beneficiary at your death without the necessity of probate. Assets placed in a living trust can avoid probate, but it's far simpler and less expensive to simply transfer the property by beneficiary deed if you live in a state that recognizes this option.

You can create and sign a transfer-on-death deed now, moving your property from your sole name into the name of your beneficiary, but the deed is not valid and does not take effect until you die. You continue to own the property during your lifetime, so you retain the right to mortgage it or sell it. Your beneficiary has no legal right to it until your death.

You do have to record the deed with the county land records office where the property is located. If you change your mind—perhaps you decide you want to leave the property to someone else at a later point in time—you can simply revoke the deed or create and record a new one to supersede the old one and transfer the property to someone else.

Because you're not technically giving the property away during your lifetime, the deed will not incur a gift tax. However, the property will contribute to the value of your estate for estate tax purposes.

States That Recognize Transfer on Death Deeds

As of 2021, the following states recognize transfer on death or beneficiary deeds.

  • Alaska
  • Arizona
  • Arkansas
  • California 
  • Colorado
  • District of Columbia
  • Hawaii
  • Illinois
  • Indiana
  • Kansas
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Mexico
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • South Dakota
  • Texas
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

At least five other states—Florida, Michigan, Texas, Vermont, and West Virginia—recognize an "enhanced life estate deed," sometimes referred to as a "Lady Bird Deed." An enhanced life estate deed functions in a manner similar to a transfer on death deed.

How a TOD Deed Avoids Probate

First, the owner signs a new deed that states who she would like to inherit the real estate at her death. Some states require that an attorney must prepare the new deed. For example, Florida law strongly recommends that an attorney prepare an enhanced life estate deed in order to avoid inadvertently preparing a regular life estate deed instead.

The new deed must be signed and recorded with public land records office, usually in the county where the real estate is located. Recording it should not incur real estate transfer taxes, because there won't be an immediate transfer of ownership. Recording fees can vary from state to state.

Finally, the death certificate is also recorded among the same public land records office after the original owner dies. This puts the world on notice that title to the real estate has been transferred into the name of the beneficiary listed in the TOD deed due to the owner's death.

When the Owner Changes His Mind

If the owner of the real estate should have a change of heart and decide that he does not want his named beneficiary to inherit his property, it's a simple matter to "undo" the deed. He can sign and record a new TOD deed naming someone else instead. This rescinds the previous deed because the most recent TOD deed is considered to be the valid one in most states.

It's always a good idea to also file a statement of revocation of the first deed with public land records, however. This way there's absolutely no confusion or doubt about your intent. 

Determining Whether You Should Consider a TOD Deed

The ultimate goal of a TOD deed is to avoid the costly probate process after the owner of real estate dies. But the laws governing these types of deeds or similar documents can vary widely from state to state. In the end,​ a TOD deed might not be the right choice in certain situations.

Consult with an estate planning attorney to determine whether one of these deeds is right for you and your family. 

Frequently Asked Questions (FAQs)

What are the disadvantages of transfer-on-death deeds?

There could potentially be issues with a title company refusing to insure the property. Transfer-on-death deeds can also be subject to some of the same issues as wills. They can be challenged or contested by an unhappy heir who expected to receive the property and then ties the matter up in court.

Can a beneficiary deed only transfer real estate?

Technically, a deed refers specifically to real estate, but several assets can be transferred in the same manner. Banks and credit unions offer payable-on-death accounts, and the Uniform Transfer-on-Death Securities Act allows brokerage accounts, stocks, and bonds to have beneficiary designations as well.

How will a transfer-on-death deed affect my mortgage?

You have the right to take a mortgage against the property during your lifetime, and you can do a transfer-on-death deed for a property that has a mortgage against it. But your beneficiary will have to pay the mortgage after your death when the property transfers to them. Any other liens against the property will follow it as well, becoming the responsibility of your beneficiary.

NOTE: State laws change frequently, and the following information may not reflect recent changes. For current legal advice, please consult with an attorney, because the information contained in this article is not legal advice and is not a substitute for legal advice.

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  1. Superior Court of California, County of Alameda. "What Are the Advantages of a Living Trust?"

  2. AARP. "Transfer on Death Deed (TODD)," Page 1.

  3. Alaska Court System. "Transfer on Death Deed - What Does the Transfer on Death (TOD) Deed Do?"

  4. Alaska Court System. "Transfer on Death Deed - Do I Have to File the TOD Deed in Court?"

  5. Alaska Court System. "Transfer on Death Deed - How Do I Revoke the TOD Deed After It Is Recorded?"

  6. Internal Revenue Service. "Estate and Gift Taxes."

  7. FindLaw. "Transfer on Death Tax Implications."

  8. Alaska Court System. "Transfer on Death Deed."

  9. Arizona State Legislature. "33-405. Beneficiary Deeds; Recording; Definitions."

  10. FindLaw. "Arkansas Code Title 18. Property § 18-12-608. Beneficiary Deeds--Terms--Recording Required."

  11. Sacramento County Public Law Library & Civil Self Help Center. "Transfer on Death (TOD) Deeds," Page 1.

  12. Colorado General Assembly. "Probate, Trusts, and Fiduciaries," Pages 1-2.

  13. District of Colombia, Office of Tax and Revenue. "Revocable Transfer-on-Death Deed," Pages 1-3.

  14. Hawaii State Legislature. "Uniform Real Property Transfer on Death Act."

  15. Illinois General Assembly. "(755 ILCS 27/) Illinois Residential Real Property Transfer on Death Instrument Act."

  16. FindLaw. "Indiana Code Title 32. Property § 32-17-14-11."

  17. Kansas Legislative Sessions. "Article 35 - Transfer-on-Death."

  18. Minnesota Legislature, Office of the Revisor of Statutes. "507.071 Transfer on Death Deeds."

  19. Missouri Revisor of Statutes. "461.025. Deeds Effective on Death of Owner — Recording, Effect."

  20. Montana Code Annotated 2019. "72-6-415. Optional Form of Transfer on Death Deed."

  21. Nebraska Legislature. "Nebraska Revised Statute 76-3402."

  22. Nevada Legislature. "NRS 111.771 Property Held in Beneficiary Form; Registration in Beneficiary Form; Transfer-on-Death Directions."

  23. State Bar of New Mexico. "Transfer on Death Deed," Pages 1-2.

  24. North Dakota Legislative Branch. "Chapter 30.1-32.1 Uniform Real Property Transfer on Death Act," Pages 1-3.

  25. Ohio Laws and Rules. "5302.23 Designating Transfer on Death Beneficiary."

  26. Legal Aid Services of Oklahoma. "Non-Testamentary Transfer–on-Death-Deed."

  27. Oregon State Legislature. "Uniform Real Property Transfer on Death Act."

  28. South Dakota Legislature. "Part 4. Uniform Real Property Transfer on Death Act - 29A-6-403."

  29. Texas Constitution and Statutes. "Texas Real Property Transfer on Death Act."

  30. Virginia General Assembly. "§ 64.2-635. Optional Form of Transfer on Death Deed."

  31. Washington State Legislature. "Chapter 64.80 RCW Uniform Real Property Transfer on Death Act."

  32. West Virginia Legislature. "Chapter 36. Estates and Property."

  33. Wisconsin State Legislature. "705.15 Nonprobate Transfer of Real Property on Death."

  34. State of Wyoming Legislature. "HB0201 - Transfer on Death Deed."

  35. American Council on Aging. "How Lady Bird Deeds Protect a Medicaid Recipient's Home for Loved Ones."

  36. Gibbs Law Office. "Using a Lady Bird Deed in Florida [Overview, Pros and Cons]."

  37. Sacramento County Public Law Library & Civil Self Help Center. "Transfer on Death (TOD) Deeds," Page 3.

  38. Sacramento County Public Law Library & Civil Self Help Center. "Transfer on Death (TOD) Deeds," Page 5.

  39. Sacramento County Public Law Library & Civil Self Help Center. "Transfer on Death (TOD) Deeds," Page 4.

  40. Legal Resources. "What Are Transfer on Death Deeds?"

  41. Cornell Law School Legal Information Institute. "Transfer-on-Death (TOD)."

  42. "Transfer on Death (TOD): Information and Answers."

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