A home can represent years of hard work, financial investment, and family memories, so planning for who will receive it can feel deeply personal. You may want to ensure that a loved one inherits your property while still maintaining complete control of it during your lifetime.
A transfer-on-death deed (TODD) can accomplish both goals. A TODD allows you to designate who will receive real estate upon your death, while allowing you to retain ownership and control of the property during your lifetime.
Whether you are helping a parent plan for the future or making plans for your own property, understanding how a TODD works can help you determine whether it aligns with your estate planning goals. The sections below explain how a transfer-on-death deed may allow Minnesota real estate to avoid probate.
The Deed Names a Beneficiary but Does Not Transfer Ownership
In Minnesota, a transfer-on-death deed has no effect on ownership of the property while you are alive. You may continue to live in the home, rent it, refinance it, or sell it without the beneficiary’s permission.
Importantly, the beneficiary has no present ownership in the property. Because ownership does not transfer during your lifetime, the beneficiary generally cannot prevent you from selling or otherwise dealing with the property. If you sell the property, the TODD generally no longer applies to the interest that was sold. You may also revoke the transfer-on-death deed by recording a revocation or a new TODD. The beneficiary does not need to sign or consent to the TODD while you are living.
Recording Before Death Is Essential
To create a valid transfer-on-death deed, the deed must be recorded with the county recorder or registrar of titles in the county where the property is located before the death of the grantor owner. The TODD must identify the beneficiary or beneficiaries, include the property’s proper legal description, and comply with Minnesota deed execution and acknowledgment requirements. If the owner does not record the deed before death, the transfer-on death deed is ineffective.
The Beneficiary Completes the Transfer After Death
Upon the owner’s death, the property generally passes to the designated beneficiary without the need for a probate proceeding. To complete the transfer of title, the beneficiary records an Affidavit of Identity and Survivorship along with a certified copy of the death certificate.
In addition, the beneficiary generally must also obtain and record a Medical Assistance clearance certificate addressing any Medical Assistance claims or liens. A transfer-on-death deed also does not eliminate existing obligations attached to the property. Mortgages, tax liens, judgments, or other encumbrances may continue to affect the property.
Why a Transfer-on-Death Deed Should Be Coordinated with Your Estate Plan
When considering a transfer-on-death deed in Minnesota, it is important to ensure that the deed accurately reflects both current ownership of the property and your overall estate-planning objectives.
While a TODD can be an effective probate-avoidance tool, it may not be the best solution in every situation. Ownership issues, blended-family concerns, the number of beneficiaries, beneficiary circumstances, and creditor considerations can all affect whether a TODD is appropriate.
Carefully reviewing these issues with an experienced estate planning attorney can help identify potential complications before they delay or disrupt the transfer of the property. An attorney can also help ensure that the TODD coordinates properly with the rest of your estate plan and reflects your long-term goals.