The Transfer on Death (TOD) Deed will become available to property owners in New York on July 10, 2024, through the introduction of Section 424 to New York State Real Property Law.
While other states already allow the utilization of Transfer on Death Deeds (also known as Lady Bird Deeds), the introduction of the TOD Deed represents a significant change for estate planning in New York. Now, property owners have the choice to simplify the process by which real estate is transferred to their beneficiaries. They are no longer required to utilize a will or trust and undergo the probate process if they want to transfer real estate to beneficiaries. A property owner can name a beneficiary or beneficiaries to receive their property upon their death by recording a TOD deed.
The TOD Deed becomes effective upon the death of the property owner provided that the TOD Deed was signed by the owner, in the presence of two witnesses who have also signed the deed which is then recorded in the county clerk’s office where the property is located before the death of the transferor. There is no impact on the transferor/owner during their lifetime - they retain complete rights to transfer or encumber the property while they are live. If the property is encumbered during the life of the owner, the property will pass to the beneficiary subject to any liens or existing interests in the property.
There is flexibility in this type of transfer in that the owner/transferor may revoke the deed by recording a new one – it cannot, however, be revoked through the use of a will. Further, if the designated beneficiary does not survive the owner/transferor, the transfer lapses, and the deed will not control the disposition of the property upon the owner’s death. A beneficiary of a TOD Deed need not receive notice of the deed for it to become effective, however, they may renounce all or part of their interest in the property just as they could if they had inherited it under a will.
The TOD Deed provides an important, simplified, way for property to change hands upon an owner’s death. However, for many individuals who own property in New York, it still may not be the best estate planning tool for their needs.
For example, it may be wise for an owner with a disabled child who is receiving government benefits to let their property pass through their will and into a supplemental needs trust rather than directly transfer the property through a TOD deed. This will prevent their benefits from being interrupted. Further, an aging property owner should consider placing their property into an irrevocable trust to protect against creditors and as part of a Medicaid planning strategy.
By Transferring property into an irrevocable trust, the assets inside the Trust will not be countable for Medicaid eligibility purposes and will be protected from Medicaid estate recovery. Further, assets placed into a trust rather than transferred outright to a beneficiary can be managed beyond the owner’s death by the terms and conditions the owner has stipulated in the trust. This can protect a beneficiary from their own creditors, poor spending habits, or former spouses.
While a TOD Deed may be useful in some cases, it is always wise to consult with an experienced estate planning attorney to determine the best estate planning tool for you and your unique family’s needs. Call the Queens, NY probate attorneys at the Law Offices of Roman Aminov, P.C. at 347-766-2685 to discuss your estate plan today.
This article is for educational purposes only - to provide you with general information, not to provide specific legal advice. Use of this post does not create an attorney-client relationship and information contained herein should not be used as a substitute for competent legal advice from a licensed attorney in your state.
