Transfer on Death Deeds are way of avoiding the costs and delays of Probate with respect to real property.
Who may use a Transfer on Death Deed?
Any person who owns real property or an interest in real property as the sole owner or as a tenant in common.
How is the interest created?
Through the use of an executed and recorded deed conveying the interest to one or more individuals, including the grantor, and by designating one or more persons by name as transfer on death beneficiaries. There may also be contingent beneficiaries if the primary beneficiaries do not survive the grantee.
Must the deed be delivered to the beneficiaries upon execution?
No, recording is sufficient for a Transfer on Death Deed.
Once a Transfer on Death Deed is recorded designating certain beneficiaries, can the beneficiaries be changed?
Yes by recording another Transfer on Death Deed designating other beneficiaries. The statute specifically provides that no "future interest" is created by such a deed and that the beneficiaries
acquire no present interest in the property.
After the recording of a Transfer on Death Deed can the Transferee (Present Owner) sell or mortgage the property?
Yes. A consequence of not creating a present interest in the beneficiaries is that the grantee is free to sell, mortgage or encumber the property. Anyone dealing with the property is not affected by the designation of transfer on death beneficiaries. Liens against beneficiaries do not attach to the real property until title vests in the beneficiary. The rights of the holders of liens are not affected by a transfer on death designation and the beneficiaries need not be made parties to a foreclosure action.
In issuing a title commitment or policy should the interest of the beneficiaries be shown?
No. They have no interest in the property until the death of the owner.
Is a transfer on death deed exempt from estate tax?
Not unless it would otherwise be exempt. It should be listed on a Estate Tax Return and treated in a manner similar to survivorship property.
How is title transferred to the beneficiaries upon the death of the owner?
An affidavit must be presented to the County Auditor and recorded with the Recorder. The affidavit must contain the date of the owner's death, a certified copy of the deceased owner's death certificate, a description of the property and the names and addresses of each designated transfer on death beneficiary who has survived the deceased owner. The names of any designated transfer on death beneficiary who did not survive the owner shall be listed and a certified copy of their death certificate should be attached to the affidavit. If contingent beneficiaries are taking an interest in the real property their names and addresses should also be included in the affidavit.