Law Offices of Juliet Cohen, P.C.

Elder Law, Trusts and Estates, Probate & Administration

Using Transfer-on-Death Deeds in Estate Planning

Estate Planning, tax, tax planning, Trust, trust administration / by

transfer-on-death deeds

Avoiding probate is one of the main goals in estate planning—especially when real estate is involved. Probate can delay access to property, incur legal fees, and create stress for your loved ones. One increasingly popular tool to bypass this process is the transfer-on-death deed (TOD deed).

TOD deeds allow real estate to pass directly to a named beneficiary when the owner dies, without going through probate. While this tool isn’t available in every state, it can be a simple and effective strategy in the right circumstances. Here’s how it works and whether it might be right for your estate plan.

What Is a Transfer-on-Death Deed?

A transfer-on-death deed is a legal document that names a beneficiary who will inherit your real estate automatically upon your death. During your lifetime, you retain full control of the property—you can live in it, rent it, refinance it, or even sell it. The TOD deed only takes effect after your death.

Because the transfer is automatic, the property avoids probate entirely. All your beneficiary typically needs to do is file a death certificate and a simple affidavit with the local land records office.

Are TOD Deeds Available in New York?

New York does not currently allow TOD deeds for real estate. However, many other states do. If you own out-of-state property, such as a vacation home or investment property, you may be able to use a TOD deed in that state—even if you live in New York.

This is particularly important because real estate located in other states is subject to ancillary probate—a separate court proceeding outside of New York. A TOD deed can help you avoid this process and pass property more efficiently to your chosen heirs.

Advantages of TOD Deeds

1. Avoid Probate

TOD deeds are primarily used to bypass the probate process, allowing heirs to receive property quickly and with less expense.

2. Maintain Control

Unlike joint ownership, a TOD deed doesn’t give your beneficiary any legal rights to the property during your life. You can revoke or change it anytime.

3. Simple and Affordable

They are generally easier and less expensive to create than a trust, especially for straightforward property transfers.

4. No Immediate Tax Consequences

Because the beneficiary has no present interest, there are typically no gift tax concerns at the time of signing.

Potential Downsides to Consider

While TOD deeds offer clear benefits, they aren’t the right solution for everyone. Consider the following limitations:

1. Not Recognized in New York

Because New York does not allow TOD deeds, you’ll need alternative tools—like a revocable living trust—for real estate located in the state.

2. Limited Use with Multiple Heirs

If you want to leave a property to multiple people, a TOD deed can create issues with joint ownership and coordination after your death. A trust may be more appropriate.

3. Does Not Avoid Creditors or Liens

The property will still be subject to any existing debts or legal claims. A TOD deed doesn’t shield the property from creditors.

4. Possible Conflicts with Estate Plans

If your will or trust contradicts the TOD deed, the deed will usually take precedence. It’s critical to make sure all documents align.

TOD Deeds vs. Trusts: Which Should You Use?

A TOD deed can be an excellent choice if you own one or two out-of-state properties and want to avoid probate without creating a full trust. However, if your estate is more complex—or if you want greater control over how and when property is transferred—a revocable living trust may be better.

In some cases, people use both. For instance, you might transfer your New York home into a trust while using a TOD deed to handle a vacation property in another state.

How to Create a TOD Deed

If you decide to move forward with a TOD deed in a state that allows it, here’s what you’ll typically need to do:

  1. Obtain the correct deed form for the specific state and county.
  2. Name your beneficiary clearly.
  3. Sign the deed in front of a notary.
  4. File the deed with the appropriate local recording office.

Keep a copy with your estate planning documents, and inform your beneficiary where the original is stored.

Conclusion

While not available in every state, transfer-on-death deeds can be a powerful estate planning tool for passing real estate outside of probate—especially for out-of-state properties. They’re affordable, easy to implement, and keep you in full control during your lifetime.

Because TOD deeds may not be valid in New York, it’s important to understand your alternatives. An experienced estate planning attorney can help you coordinate your real estate strategy and avoid costly missteps.

Speak to an Attorney
Contact the Law Offices of Juliet Cohen, P.C. to learn how transfer-on-death deeds may fit into your estate plan. Our experienced attorneys can help you avoid probate pitfalls and ensure your real estate is passed on smoothly and according to your wishes.

Juliet Cohen
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