In 2008, “the TODD” passed in Minnesota. What is the TODD? It refers to a Transfer on Death Deed. A TODD allows a home to pass from one person to another after the owner’s demise quicker and cleaner than before. However, it requires specific, simple situational circumstances to be effective.
Without an estate plan, the transfer of real property (land) at death typically triggers the probate process – a lengthy battle that practically forces the heirs to remortgage the house to pay the court fees. With a TODD, an owner designates who will assume ownership of the property upon his or her death, bypassing the whole probate arena. A TODD can accommodate multiple owners (property passes after all owners die) and multiple recipients (e.g. to our children in equal shares). After the last owner’s burial, a county clerk hands the house’s deed to the person(s) listed on the TODD.
A TODD is not a one-size-fits-all solution, and should only be used in certain circumstances. Among other considerations:
- A TODD is only one piece of an overall estate plan, and it must be accompanied by a will.
- Use a TODD if the house is the only worthwhile asset. If anything else graces your home, like an expensive car, antique furniture, etc., then use a revocable trust instead.
- Only use a TODD when equally splitting the house value between a handful of people or less.
- To be valid, a TODD must be recorded with the appropriate county before the original owners die.
- The beneficiary language in a TODD must be drafted very carefully and precisely. Any vagueness in the document creates loopholes that could send this through probate, thereby defeating a primary reason for using a TODD in the first place.
A TODD is a new tool that should be considered as part of an overall estate plan. Ask your attorney if a TODD is right for you.