Want to transfer property without probate in New York? The new Transfer on Death (TOD) deed law may be your solution. This guide walks you through everything you need to know about NY TOD deeds and how they can help you pass property directly to your loved ones.
What is the Transfer on Death deed?
A TOD deed lets property owners name specific beneficiaries who’ll receive their real estate automatically after death. During their lifetime, owners maintain complete control over their property, including the right to sell or place mortgages, without needing beneficiary approval.
Legal Requirements
The creation of a valid TOD deed demands specific elements. The document must explicitly state that the transfer occurs at the owner’s death. Unlike standard property deeds, a TOD deed requires both notarization and two witnesses – similar to Will requirements. The deed must be properly recorded at the county office before the owner’s death to take effect.
Who Can Use TOD Deeds
Any property owner can utilize a TOD deed, including those who own property as tenants-in-common or with rights of survivorship. For properties with multiple owners holding survivorship rights, the TOD deed takes effect only after the last surviving owner’s death.
Special Provisions for Multiple Beneficiaries
When multiple beneficiaries inherit through a TOD deed, they become co-tenants with specific rights. The law includes a notable right of first refusal provision. If one co-tenant wants to sell their share, other co-tenants have 180 days to match any outside offer. This provision helps keep property within families but can significantly impact property marketability.
Medicaid Considerations
TOD deeds interact uniquely with Medicaid recovery. While the property remains an asset during the owner’s life, the TOD deed can potentially prevent Medicaid recovery after death since the property bypasses the probate estate.
Benefits of Choosing a TOD Deed
The TOD deed offers several advantages over traditional property transfer methods. It provides a straightforward, cost-effective way to transfer property while avoiding probate costs and delays. Owners retain full property control and can revoke the deed at any time if circumstances change.
Limitations to Consider
Despite its benefits, TOD deeds have important restrictions. They don’t allow for detailed succession planning, and if one beneficiary dies before the owner, their share typically passes to surviving beneficiaries rather than their children. Additionally, TOD deeds can’t transfer property directly to minors, requiring alternative arrangements for young beneficiaries.
Creditor Rights
The law provides specific protections regarding creditors. While creditors can’t directly attach liens to TOD deed property, the estate may reclaim the property to satisfy debts if the probate estate proves insufficient.
Making the Right Choice
While TOD deeds offer an attractive option for simple estate plans, they work best as part of a comprehensive estate planning strategy. For situations involving multiple beneficiaries, minor children, or long-term care considerations, other tools like trusts might prove more appropriate.
This new addition to New York’s property law provides a valuable alternative for property transfer, but careful consideration of individual circumstances remains essential for making the best choice for your estate planning needs.
It’s best to consult with an attorney to better understand of a Transfer on Death Deed is the right choice for you. We’d be happy to assist.
