If you’re a property owner, you’ve likely considered what will happen to your property after your death. Many people have some idea of who they’d like their property to pass to, but if the proper steps aren’t taken in advance, your wishes may not play out as you’ve imagined them.

One tool that might be useful in your estate planning is a transfer-on-death deed (“TODD”). Depending on family dynamics, a TODD can be a great option, especially for individuals whose largest asset may be a single piece of property that makes up the majority of their estate. In many cases, a TODD can be a good first step in the estate planning process, though you should also consider other options, such as a Last Will and Testament or in some cases a living or irrevocable trust.

A transfer-on-death deed is a straightforward estate planning tool that can easily and quickly be put in place to ensure that your property transfers to your desired beneficiaries without having to go through a lengthy probate process.

What to know about transfer-on-death deeds:

 • The deed has no impact while the transferor is alive; there is no change in the status of the property or the owner during the property owner’s lifetime.

 • A TODD is revocable at any time during the life of the transferor, though revocation must be in writing and recorded at the Registry of Deeds.

 • Any encumbrances on the property, such as a mortgage or lien, transfer with the property and become the responsibility of the beneficiary once the property is transferred to them.

 • If there’s more than one beneficiary, a TODD creates a tenancy in common between the beneficiaries rather than a joint tenancy. There are a few important distinctions between these two types of tenancies, and it’s a good idea to speak with a lawyer to determine which makes the most sense in your situation.

 • Unless otherwise provided in the TODD, if there is a sole beneficiary and they predecease the transferor of the property, or if there are multiple beneficiaries who all predecease the transferor, the interest of the deceased beneficiary(ies) lapses and the deed is ineffective. Likewise, if there are remaining living beneficiaries, the property will pass to the living beneficiaries with no leftover share for the deceased beneficiary.

 • TODD are exempt from the transfer tax that generally applies to property transfers through traditional conveyances.

The foregoing are the default provisions related to TODDs. Some of these provisions are flexible and can be modified by the language contained in the deed if desired.

What happens if you don’t have a plan in place?

If someone has no estate plan in place at the time of their death, and they own assets solely in their name without a designated beneficiary, then their property generally passes to their heirs (children or other related family members) in equal shares. However, to effectuate a transfer of property under this circumstance, the heirs must go through probate, a sometimes lengthy and expensive process. A TODD is a nonprobate transfer, meaning that the beneficiaries take the property without the necessity of going to the Probate Court.

What other steps do beneficiaries need to take?

Fulton Rice, Real Estate Attorney at Murray Plumb & Murray. Image provided by Murray Plumb & Murray.

If you receive a property through a TODD when someone dies, there’s one important step that you should prioritize when wrapping up the deceased’s affairs. There’s a lot to navigate after the death of a loved one, but just as you might be thinking about funeral arrangements, dealing with the property, managing bills and bank accounts, you should also be sure to file a notice of death affidavit at the Registry of Deeds.

If you inherit a property through a TODD, by law you don’t need to do anything – it becomes your property at the time of death. However, if you go to sell or mortgage the property in the future, absent public record that your loved one has died, there’s no way to tell that the property was transferred to you (lawyers call this a title issue or title defect). This can cause confusion with future lenders or buyers, and could even lead to a lien on the property if the town or city does not know to send tax bills to you and they’re going unpaid. Be proactive in recording a notice of death affidavit now to avoid future confusion surrounding the property.

There are a number of tools that can help ensure your estate is managed in accordance with your wishes after your death, and the TODD is just one recently added tool to the toolbox in Maine. Individuals with larger estates can likely benefit from estate planning beyond just a TODD. Whatever your estate or wishes look like, working with an attorney can help determine the best plan to have in place for the future.

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