A Transfer on Death Deed Is One Tool—Not the Whole Estate Plan

A Transfer on Death Deed, often called a TODD, can be a useful estate-planning tool. It allows real estate to pass directly to a named beneficiary at the owner’s death, potentially avoiding probate for that property. Like any tool, however, it works best when it is used for the right job and coordinated with the rest of the estate plan.

A TODD controls only the real estate described in the deed. It does not address bank accounts, vehicles, business interests, personal property, incapacity planning, or the administration of the rest of the estate. It also operates separately from a Will. A Will may divide an estate equally among several beneficiaries, while a TODD leaves the residence to only one of them. In that situation, the deed—not the Will—generally controls the residence.

Problems can also arise when a property owner names one beneficiary but expects that person to share the property or sale proceeds with others. Unless that obligation is legally established, the beneficiary may be free to keep the entire property. Even when the beneficiary intends to honor the owner’s wishes, a later transfer may create tax, creditor, title, or family complications.

Naming multiple beneficiaries does not necessarily solve the problem. When a TODD leaves property to two or more people, they generally become co-owners at the owner’s death. They must then agree on whether to keep, sell, rent, repair, or refinance the property and how to divide the expenses and proceeds. Different financial circumstances, family relationships, or expectations can quickly turn shared ownership into conflict, delay, or even a partition lawsuit.

A TODD is one tool in the estate-planning toolbox, but it is not the right tool for every estate. The better question is not simply whether it will avoid probate, but whether it will accomplish the owner’s overall goals when used alongside a Will, beneficiary designations, powers of attorney, and other planning documents. Sometimes a TODD is the right fit. In other cases, a revocable living trust or another strategy will provide a clearer, more reliable, and easier-to-administer result.