What is a Transfer on Death Deed in Real Estate?
A “Transfer on Death” deed (TODD) is a type of legal instrument that will automatically transfer the ownership of real property to a beneficiary designated by name on a deed upon death of the current owner. Because the right of ownership is automatic upon death, a TODD is often viewed as a beneficial way to avoid probate altogether. It is worthwhile however to note the limitations of a Transfer on Death Deed. A TODD is revocable either by the current owner, or if the current owner sells the ownership right to another individual. Also, unlike a co-owner who can enjoy present ownership rights to a property, a named beneficiary can only enjoy ownership rights upon death of the current owner.
Transfer on Death Deeds Are Recorded with the County
Prior to the death of the current owner, the Transfer on Death Deed should be properly recorded in the county where the property is located. This requires filing the Transfer on Death Deed in the county recorder’s office and paying a fee. The clerk will take the deed and process it by taking the actions necessary to officially create the TODD. Once this process is completed, the TODD will become a publicly available document. If someone wanted to learn whether a TODD is in place, they need only contact the county recorder where the property is located.
Transfer on Death Deed vs. a Will or Trust
A Transfer on Death Deed is a distinct legal instrument from a trust or will. However, what to keep in mind if a TODD is in place, is that ownership/titling documents trump beneficiary interests conveyed in either a trust or will. While it is true that several estate planning legal tools can be used together (such as a TODD conveying ownership interest to a trust), if the same property is conveyed in a will to one heir and by TODD to a different beneficiary, because the TODD is an ownership/titled document, that conveyance will prevail over the inheritance dictated exclusively by a will. A will, trust, TODD, and Joint Tenancy with Right of Survivorship are all means to transfer ownership, however, the limitations and advantages of each do vary. It is best to consult an experienced licensed Realtor or a probate attorney to determine what means of ownership transfer align with your estate planning needs.
Preparation for Sale or Transfer During Oregon Probate
Property transferred with a Transfer on Death Deed, for tax purposes, should be treated as real property conveyed by probate. Therefore, for most estate distributions, there should be no federal or state estate tax. Therefore a home that is transferred under a recorded Transfer on Death Deed, does not require appraisal. Yet, once transferred by TODD and before the beneficiary owner can list the home for sale or transfer by a Realtor, the property must be appraised or undergo valuation as a typical real estate transaction. There are two evaluations needed, one for current market value and one for the home’s market value on the past date of death. This is often called a date of death appraisal and can be completed by a licensed appraiser or a licensed real estate agent. Involving a probate attorney and a real estate agent that specializes in probate homes can help ensure all regulations and requirements are met satisfactorily. An experienced real estate agent can provide both values for you, current market value and a date of death value.
Probate is the process of administration and distribution for the estate of a deceased individual. Many states require a probate procedure for distribution of the decedent’s assets and real property. In Oregon, without a recorded “Transfer on Death” deed or other estate planning instrument, the probate of an estate governs distribution for selling or transferring the title of a house.
Is a Transfer on Death Deed Right for You?
We recommend contacting Romano Law today to discuss your available options. If at any point you need to determine the fair market value of a home, or a past date of death value in preparation for market, please give our probate experienced top 1% sellers agents a call at 503-714-1111 or chat with the bot on our site. We look forward to connecting with you.September 21, 2022