What is a transfer on death deed? How does it work?

What a transfer on death deed does

A transfer on death deed (sometimes called a TOD deed or, in some states, a beneficiary deed) lets a property owner name a beneficiary who will receive the property automatically at the owner's death, without the property passing through the will or through probate. The owner signs and records the deed now, naming the future beneficiary, but keeps full ownership and control of the property during their lifetime.

Nothing changes until you die

This is the detail people find most reassuring: recording a TOD deed doesn't give the named beneficiary any current interest in the property. The owner can still sell it, refinance it, or revoke the deed entirely at any time while alive, with no permission needed from the beneficiary. The deed only takes effect if the owner still holds the property at death. Sell it beforehand and the TOD deed simply becomes irrelevant.

Why it avoids probate

Property that passes through a will still has to go through probate, the court process that validates the will and oversees distribution of the estate, which takes time and, in many cases, court costs. A properly recorded TOD deed transfers the property by operation of law the moment the owner dies, the same way a beneficiary designation moves a life insurance payout, sidestepping probate for that asset entirely.

It's not a substitute for a full estate plan

A TOD deed is a tool for one asset: the specific piece of real property named in the deed. It doesn't address anything else in an estate: other property, financial accounts, guardianship for minor children, or what happens if the owner becomes incapacitated before death. We generally recommend it as a piece of a broader plan, not a replacement for a will or, where it makes sense, a trust.

How we set one up

The deed has to be properly drafted, signed, and recorded with the Circuit Court Clerk before it does anything, the same recording requirement that applies to any deed. Watch the full episode above for Brett's explanation of how the deed is structured and what to consider before naming a beneficiary, and reach out if you'd like one prepared as part of your plan.