Exploring the Estate Planning Vehicle – Transfer on Death Deeds (TODD)
Transfer on Death Deed
The Transfer on Death Deed (known as “TODD”) became available in 2008 to be used as an estate planning tool for those individuals owning Minnesota real property and are governed under Minnesota Statutes § 507.071. The TODD evolution stemmed from the concept of “payable on death” or “transfer on death” transactions that involve survivorship rights when someone passes away. Oftentimes, the TODD is utilized to avoid probate and to simplify estate planning because the only way to transfer or sell a decedent’s real estate, if no other planning is completed, is through a probate proceeding.
Multiple states have incorporated the TODD, or a similar transfer vehicle, into their legal systems. A TODD can be a very useful tool to avoid probate; however, this may not be a good option for all people. There are valuable nuances to be aware of when incorporating a TODD into your estate plan, which we would like to expand on. Planning to fuel this vehicle may cause problems down the road, which may not be what the Testator/ Grantor intended when crafting their estate plan. Therefore, the importance of legal guidance when preparing an estate plan that includes a TODD is key.
A TODD allows the owner of real property to execute a deed that designates a beneficiary who will take ownership of said real estate at the owner’s death (or the surviving owner’s death, if the real property is held in joint tenancy). The TODD is also subject to a 120-hour survivorship requirement under Minn. Stat. § 524.2-702, a similar requirement under estate planning and probate administrations.
Beneficiaries of TODD Deeds
A TODD may designate multiple grantee beneficiaries to take title as joint tenants, as tenants in common, or in any other form of ownership or tenancy that is valid under Minnesota law. The common default is tenants in common, which means this…if you do not specify and include on the deed that you want the beneficiaries to take tile as “joint tenants,” then the beneficiaries will take title as tenants in common.
A TODD also allows you to include designations of one or more successor grantee beneficiaries, or a class of successor grantee beneficiaries, or both. If the transfer on death deed designates successor grantee beneficiaries, or a class of successor grantee beneficiaries, the deed shall state the condition under which the interest of the successor grantee beneficiaries would vest (joint tenancy or tenants in common). For example:
Jane Doe, an unmarried person (“Grantor Owner”), hereby conveys and quitclaims to
Johnny Johnson, a single person (“Grantee Beneficiary”), effective on the death of the
Grantor Owner, real property in Dakota County, Minnesota, legally described as follows:
If Johnny Johnson fails to survive me and leaves no living issue, I, Jane Doe, an
unmarried person, Grantor Owner, hereby conveys and quitclaims the above
described real estate to my son, Jack Doe, if he survives me, and to my daughter,
Jill Doe, if she survives me, as joint tenants (“Grantee Beneficiaries”), effective
on the death of the Grantor Owner, Jane Doe.
Overall, it is important to be detailed and accurate when preparing, executing, and recording a TODD in order to avoid having to proceed with a probate administration to effectuate the transfer upon the Grantor Owner’s death. This detail may include having the correct legal descriptions and title holdings for the real property when preparing the TODD, to receiving legal advice and guidance on this tool and its purpose from an attorney, as well as understanding the Grantor’s clear intent for including a TODD in his/her estate plan.
Are you ready to “fuel the TODD vehicle?
If you wish to discuss your questions concerning the Transfer on Death Deed (TODD) or wish to speak to an attorney about your estate planning needs, please contact Tina M. Johnson, RP® of Kennedy Law Office: 651-262-2080 or firstname.lastname@example.org