A Transfer on Death Deed ("TOD Deed") allows a real property owner to designate a beneficiary to receive title to certain real property on the owner’s death without a probate proceeding or trust administration.

There are different names for a Transfer on Death Deed, and sometimes those names may depend on what state you live in.

Transfer on Death Deeds may also be called: 

- Transfer-on-Death Instrument

- Deed Upon Death 

- Beneficiary Deed

- TODD

- TOD

With a TOD deed, the current owner designates one or more persons as beneficiary. The beneficiary automatically becomes the owner of the property when the current owner dies. A beneficiary can be an individual or an organization such as a charity.

** You don’t actually have to live in the state to title property with a Transfer on Death Deed - the property just needs to be in one of the following states: 

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

* indicates that Deed Queen does not record documents in this state at this time.

- Avoids Probate

A Transfer on Death Deed allows you to avoid probate and pass your property to your family and leave an inheritance while allowing you to have full title rights during your life.

- Maintain homestead advantages

Many states offer asset protection and taxation benefits for a person's principal residence. These benefits may be lost with certain types of ownership transfers, but not with a TOD deed.

- Tax savings

Designating a beneficiary is not an immediate transfer, so no federal gift tax is owed. The beneficiary acquires ownership on the current owner's date of death. If the beneficiary later sells the property, any capital gain will be based upon the value of the property at the original owner's date of death, not the value when the original owner acquired the property.

- Maintain Medicaid eligibility

If a person applying for Medicaid has made a gift of property within a certain period before applying, that gift may delay the receipt of benefits. Upon a Medicaid recipient's death, the government may seek reimbursement from the recipient's probate estate. Fortunately, a TOD deed is not usually considered a gift of the property, nor is the property part of the probate estate subject to reimbursement.

** Keep in mind that as long as you’re alive, a Transfer on Death Deed has no impact on (or benefit for) your Beneficiary. He or she has no legal rights to the property until after you pass away. That means you pay the property taxes on it until you die.

An additional downside to a Transfer on Death Deed is it’s not an effective tax beneficial tool. However, the threshold is quite high, and the majority of Beneficiaries do not pay taxes on Transfer on Death Deeds. They will, however, take over any financial obligations on the property once they are owner, such as mortgage payments and property taxes.