Transfer on Death Deed

What is a transfer on death deed?

A transfer on death deed is a revocable, non-possessory legal instrument. "Revocable" means you can change or cancel it at any time before your death. "Non-possessory" means the beneficiary you name receives no rights to the property while you are alive. Understanding that distinction is essential, because it is the most common point of confusion among people creating these deeds.

There are two primary parties involved in creating a transfer on death (TOD) deed:

• Grantor - the current property owner who creates, signs, and records the deed. The grantor continues to own and control the property fully — paying taxes, maintaining insurance, and making decisions about the property — until death.
• Beneficiary - the person or entity who will receive the property at the grantor's death. The beneficiary has no ownership interest, no right of access, and no ability to sell or encumber the property while the grantor lives. Their interest only vests — becomes real — at the moment of the grantor's death.

To be valid, a transfer on death deed generally must be recorded with the county recorder, register of deeds, or county clerk in the county where the property is located before the grantor's death. An unrecorded TOD deed has no legal effect in most states regardless of when it was signed or notarized.

Unlike a will, a transfer on death deed transfers property automatically at death — no court involvement required.

Why use a transfer on death deed?

For property owners who want to pass a home or land to a specific person without the cost and delay of probate, a transfer on death deed is often the simplest tool available.

It bypasses probate

Probate is the court-supervised process of validating a will and distributing an estate. It can take months and costs money in court fees and attorney's fees. A properly recorded TOD deed transfers real estate directly to the beneficiary at the grantor's death without any court involvement. The beneficiary simply presents a death certificate and an affidavit of survivorship to the county recorder to complete the transfer.

You keep full control until you die

Adding a joint tenant to your deed changes the legal ownership of your property right now and once you do, that person has co-ownership rights you cannot unilaterally undo. A TOD deed works differently. The beneficiary has no legal interest in the property during your lifetime. You can sell it, refinance it, take out a second mortgage, or simply change your mind about who should receive it.

You can revoke it at any time

Notice to your beneficiary is typically not required. You can record a revocation or replace the deed with a new one without anyone's consent.

The beneficiary may receive a tax advantage

When property passes through a TOD deed, the beneficiary generally receives a stepped-up cost basis meaning the property's value is reset to its fair market value on the date of the grantor's death, not the original purchase price. This can significantly reduce capital gains tax if the beneficiary later sells. Consulting a tax professional is recommended to understand how this applies to your situation.

It is far less expensive than a living trust

A revocable living trust achieves the same probate-avoidance result but it requires drafting, funding, and ongoing management. For a property owner whose primary goal is passing a single piece of real estate to a specific person, a TOD deed accomplishes that goal at substantially lower cost and complexity.

It keeps the transfer private

A will that goes through probate becomes a public court record. A TOD deed, once the transfer is complete, is recorded in the public land records, but the beneficiary designation does not pass through the probate court's public docket, offering a meaningful degree of privacy.

Transfer on death deed vs. lady bird deed

A lady bird deed, formally called an Enhanced Life Estate Deed, achieves the same core result as a transfer on death deed: the property owner retains full control during their lifetime and the property passes to a named beneficiary at death without probate. The two instruments are functionally similar but structurally different, and they are not available in the same states. Lady Bird deeds are recognized in only a small number of states, currently Florida, Michigan, Texas, Vermont, and West Virginia.