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Death Deed Transfers: How to Perform Them and When to Use Them

No one likes to think about planning for when they pass. But it’s important to approach estate planning proactively so that your money and other assets go where you want them to; if you wait too long, then you may not have a voice in that plan.

To save your heirs the hassle of going through probate, one thing to consider is to perform a transfer on death (TOD) deed. Using this approach can also decrease the amount your beneficiaries pay while simplifying your inheritance.

What Is a Transfer on Death Deed?

With a TOD, you designate a person as the beneficiary for your asset without having to name them in your will. The beneficiary may also be a charity or organization. You might also hear TODs called beneficiary deeds or deeds upon death.

Unlike other deeds, a TOD will only take effect after your death. Why use this type of deed? Some advantages of TODs include:

  • They’re easy to create.

  • They’re easy to revoke as well if you change your mind, and they are much simpler to undo than a will.

  • In addition to saving money, the TOD can also save your beneficiaries time and get the property transferred to them more quickly.

  • You also get to maintain ownership of your asset until you pass. You continue to make decisions related to it, unlike if you add a joint owner to your asset.

  • There are no limitations on who you can designate as your beneficiary.

How Can You Use a TOD?

You can use a TOD in different circumstances. The most common use for it is for real estate transactions. Using the TOD keeps your property from moving into probate, which means it will be less costly to your heirs to get everything settled. Since your home is often your highest-value item, using a TOD to protect its value this way makes sense.

You can also use a TOD to pass on other types of possessions, such as a vehicle. It can also be employed to register stocks and bonds, which requires you to name a beneficiary who will get the account upon your death directly through your brokerage company.

Are TODs Allowed in Every State

No, not every state allows the use of TODs. In fact, in Pennsylvania, you can only use a TOD to transfer securities and bonds. The commonwealth does not let you use TODs for transferring real estate or vehicles. However, more than half of the other states allow it, including nearby Virginia, as well as Washington, D.C.

Disadvantages of TOD

The biggest disadvantage of a TOD is its limited utility in Pennsylvania. Also, if the person you designate as your beneficiary passes away before you do, then your asset will go to probate anyway, so make sure to update your TOD as soon as possible.

Do you have questions about the use of TODs for your estate? Reach out to Jay to discuss your options.


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