In a handful of states - currently Arizona, Arkansas, Colorado, Indiana, Kansas, Michigan, Minnesota, Missouri, Montana, Nevada, New Mexico, Ohio, Oklahoma and Wisconsin - a new type of document has been introduced that allows real estate owners to name who they want to inherit their property after they die. If properly signed and recorded, then this new type of document, called a transfer on death (or TOD) deed or affidavit or beneficiary deed or affidavit, will allow the real estate described in the deed or affidavit to pass to the named beneficiaries outside of probate.
How a TOD Deed or Affidavit Works to Avoid Probate
How a TOD deed or affidavit can be used to avoid probate is fairly straightforward:
- First, the current owner will sign a new deed or an affidavit that states who should inherit the real estate after the current owner's death. Note that in some states an attorney is required to prepare the new deed.
- Next, the TOD deed or affidavit will be recorded among the appropriate land records - this is usually in the county where the real estate is located.
- Then, after the owner dies, a death certificate will need to be recorded among the same land records in order to put the world on notice that title to the real estate has been transferred into the names of the beneficiaries listed in the TOD deed or affidavit due to the owner's death.
What Happens if the Owner Wants to Name Different Beneficiaries?
What happens if the current owner changes his or her mind and wants the real estate to go to different beneficiaries? Then the current owner can sign and record a new TOD deed or affidavit.
Should You Consider a TOD Deed or Affidavit?
If you live in or own real estate in one of the states that currently recognizes TOD or beneficiary deeds or affidavits, then consult with your estate planning attorney to determine if one is right for you.
