Minnesota Estate Planning Attorney Discusses the Benefits of Using a Transfer on Death Deed to Transfer a Home
Minnesota has a unique tool to for use in avoiding probate known as a Transfer on Death Deed (“TODD”). In 2008 Minnesota’s legislature passed a law that allows the owner of real estate to execute a deed naming a beneficiary who, upon the current owner’s death, will succeed to ownership of that property.
There are several benefits to using a Transfer on Death Deed to transfer real property to someone.
You Retain Your Ownership Interests. The property is not transferred until the your death. So, you retain full ownership of the property during your life. So, you may choose to remain living in the home, sell it, borrow against it or give it away without restriction.
Your Home Is Still Protected. The finanacial obligations of the beneficiary will not affect your rights to the property. This is because the beneificary does NOT have any "present interest" in the property so if he/she has any legal actions such as bankruptcy, lawsuits, or divorce that are brought against the beneficiary won’t affect the property. This offers you a lot of protection in leaving the property to someone who may not be the best at managing money as a creditor may NOT file a lien against property subject to a transfer on death deed.
Your Heirs Will Avoid Probate For That Home. Again, this is probably the main reason why people choose a Transfer on Death Deed. The real estate won’t be subject to the costs and time of court probate proceedings- the beneficiary simply submits an affidavit and death certificate with the county recorder. This allows the home to transfer to the beneficiary quickly and inexpensively. It allows avoids the "ease of contest" often found in probate procedures.
You Can Revoke It. This means that you can change or delete the beneficiaries named in the document, even without their consent. Names can be deleted or added as the you sees fit. Or, you can revoke the entire document and dispose of the property in another manner (e.g. sell it or put it into a trust).
You Have Not Given a Gift. Because you are not giving the beneficiary a present interest in the home, there is no gift. This avoids issues with having to file a gift tax return or potential problems if you end up needing medicaid (medical assistance) in the future.
As these come up quite often in my practice, whether between partners or parents and children, I will address the different aspects of Transfer on Death Deeds in a series of future posts.