Preserving & Protecting Your Family’s Assets & Legacy

Transfer on Death (TOD) Deeds in New York

by | May 23, 2024 | Estate Planning |

Section 424, which provides for Transfer on Death (TOD) Deeds, was recently added to New York State’s Real Property Law, and will become effective on July 19, 2024. With a TOD Deed, the owner of real property, or transferor, can transfer the property to one or more named beneficiaries upon the transferor’s death. Because the transfer occurs automatically upon the transferor’s death, there is no need for the heirs to go through a probate proceeding to gain control over the property.

Here are a few important things to note regarding TOD Deeds:

  1. A TOD Deed must be signed by two (2) individuals who witnessed the transferor’s execution of the deed.
  2. A TOD Deed must be recorded with the appropriate county clerk’s office prior to the death of the transferor. The county in which the subject property is located is the appropriate county for recording purposes.
  3. A TOD Deed is revocable at any time prior to the transferor’s death. A TOD Deed can be revoked by executing and recording a new deed. A TOD Deed cannot be revoked by the transferor’s Will.
  4. The transferor remains the legal owner of the property following the recording of the TOD Deed, and during the transferor’s lifetime, he or she can use, transfer or encumber the subject property in any way that he or she wishes.
  5. If the designated beneficiary of a TOD Deed predeceases the transferor, the transfer to said beneficiary will lapse.
  6. Upon the death of the transferor, a designated beneficiary of a TOD Deed takes the property subject to all liens, encumbrances and interests.

A TOD Deed could be a valuable estate planning tool if utilized under the right set of circumstances. Real property is one class of assets that often poses challenges when it comes to avoiding probate. Real property will be subject to probate unless joint owners (with rights of survivorship) are added, or the property is owned by a trust. In cases where there are reasons why adding additional owners is not advisable or desirable, or where a trust is not practical, the TOD Deed adds a third option. With a TOD Deed, probate can be avoided without the owner having to make any drastic changes during his or her lifetime, like giving up ownership or control of the property.

Although there are benefits associated with the TOD Deed, it is important to note the limitations. For example, TOD Deeds do not offer protection of the real property in the event the owner needs long-term care and wishes to qualify for Medicaid. Other planning steps and tools should be considered if asset preservation is desired. If you are interested in better understanding what estate planning options are available to you considering your goals and interests, a consultation with an experienced Estate Planning Attorney is a great place to start.

By Wayne R. Carrabus, CPA, ESQ, at Futterman, Lanza & Pasculli, LLP with offices in Smithtown, Bay Shore and Garden City, NY, and clients throughout metro New York. He concentrates his practice on Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Estate Taxes, Probate and Estate Administrations.

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