Death is always tragic. Furthermore, when it comes to the disposition of a decedent’s property, there are a multitude of legal issues that can make it even more burdensome for a decedent’s loved ones. However, Minnesota has multiple legal devices that can alleviate the difficulties transferring property after death. One such device is a transfer on death deed.
What Is a TODD?
A transfer on death deed (referred to as a TODD) is a Minnesota estate-planning tool that transfers your real estate upon death. A TODD is analogous to a life insurance policy, in that upon one’s death, the TODD will automatically transfer ownership in a piece of real estate to a named beneficiary. However, a beneficiary will have no rights or control of the real estate during the life of the grantor.
How Does a TODD Work?
A TODD is signed when the grantor is still alive, but no transfer of ownership will occur until the grantor’s death. The TODD must then be successfully recorded with the county recorder. The TODD must be recorded in a county in which at least a part of the real estate that it describes is located. If a TODD is not successfully recorded before the death of the grantor, it will be invalid.
Upon the death of the grantor, several documents must be filed with the county recording office in which the TODD was originally recorded. These include: 1) an affidavit of identity and survivorship; 2) certified copies of death certificates; and 3) a medical assistance clearance certificate.
What Types of Property Interests Can be Transferred with a TODD?
A TODD only applies to interests in real estate. A TODD cannot be used for personal property. Real estate interests can include more than just land ownership. Examples of other types of real estate interests that can be transferred with a TODD include: a mortgage, judgment lien, deed of trust, and more. However, a Minnesota TODD can only be used for real estate interests in Minnesota. In other words, a Minnesota TODD cannot apply to interests in other states.
What Are the Benefits of a TODD?
The largest benefit of a TODD is the ability to avoid probate. Probate can be a lengthy legal process that requires extensive document review and judicial approval. By avoiding this process, a TODD can save both expenses and time for transferring real estate.
A TODD allows a grantor to ensure that their real estate will be transferred upon death while also maintaining control of the property during life. Even after one executes a TODD, they remain complete control over the property until their death.
How Long Will a TODD Remain Valid?
As long as a TODD is properly recorded, it will remain valid unless the grantor revokes it or sells the property. Furthermore, if a grantor executes and records a new TODD that gives the same or a greater interest in the real estate to someone else, the later TODD will reign supreme.
Can a TODD Be Revoked?
A grantor can revoke a TODD at any time before their death. Permission or notice to the beneficiaries is not required. However, it is important to reiterate that a TODD cannot be revoked after death. Therefore, one cannot revoke a TODD with their will.
What If I Buy Property After a TODD Is Recorded?
In general, a TODD is specific to the property that is laid out in the document. Therefore, unless the TODD contains an after-acquired property clause, a TODD will not apply to any real estate that the grantor requires after its execution and recording. Therefore, a new TODD would have to be created for newly acquired property.
What Sort of Legal Issues Come with a TODD?
Claims Against Property
A TODD cannot be used to avoid a mortgage, lien, or estate claim against one’s property. Instead, the new owner will be subject to these claims as if they were the original grantor. Furthermore, a TODD cannot be used to avoid a claim for Medical Assistance (MA) or General Assistance (GA).
Permission from One’s Spouse to Convey the Homestead
In Minnesota, it is a general rule that both spouses sign a deed to transfer real estate that is the marital homestead, and this includes a TODD. This rule applies regardless of whether one spouse is listed as the sole owner of the property. Therefore, if one is married, both their and their spouse’s signature is required for the TODD.
Beneficiaries Under 18
Legal issues can arise when a grantor names a minor as a beneficiary. Although this is technically allowed, another adult will have to serve as the manager of the property.
Do I Need Legal Counsel to Draft a TODD?
Although it might be tempting for one to draft a TODD themselves, seeking legal advice is highly recommended. Any drafting error can have dire consequences. For instance, if the legal description of the real estate is incomplete or incorrect, the TODD may fail to convey all of one’s property or might be outright rejected. Furthermore, multiple complex legal issues, such as those provided above, may arise.
Dudley and Smith, P.A., has experienced estate-planning and real estate attorneys who can assist you in drafting and executing a TODD. Attorneys Joseph J. Dudley Jr. and Steven C. Opheim have worked with individuals in a wide variety of estate-planning and real estate matters. If you have questions about creating and executing a TODD, please contact Mr. Opheim or Mr. Dudley at 651-291-1717. Dudley and Smith, P.A. is a full service law firm with offices in Blaine, Bloomington, Burnsville, Woodbury, Eagan, Eden Prairie, Roseville, Mendota Heights and White Bear Lake.
The law is continually evolving and Dudley and Smith, P.A.’s blog posts should not be relied upon as legal advice, nor construed as a form of attorney-client relationship. Postings are for informational purposes and are not solicitations, legal advice, or tax advice. A viewer of Dudley and Smith, P.A.’s blog should not rely upon any information in the blog without seeking legal counsel.