What is a Transfer on Death Deed and How Does it Fit Into Your Estate Plan?

POST DATE: 8.9.19
Ccha  Estate Planning

A transfer on death deed can be a very helpful planning tool when designing an estate plan. Indiana is one of many states that allows the transfer of real property by a transfer on death deed.

The Basics: Transfer on Death Deed

The Transfer on Death Property Act, codified at Indiana Code 32-17-14 et. seq., creates a means to plan for the transfer of real property upon death that allows the grantor to transfer their interest in real property without probate.

Prior to the real property owner’s death, the transfer on death deed must: (1) be executed by the owner of the real property, or their legal representative, and (2) be recorded in the county where the real property is located. Indiana Code Section 32-17-14-11. The transfer on death deed does not need to be supported by consideration or delivered to the beneficiary. Upon the owner’s death, a properly-executed transfer on death deed will convey the real property to the beneficiary designated in the deed without probate administration. To learn more about what happens when a property owner or loved one dies without a will, please read this blog post.

Beneficiary Responsibility

The transfer on death deed designates a beneficiary, but does not actually complete the transfer of the real property to that beneficiary until the time of the owner’s death. The owner of the real property retains full control over the property during their lifetime, meaning the owner can still sell or encumber the property as usual. The owner also has the option to change or revoke the transfer on death deed at any time prior to their death. Additionally, the beneficiary has no responsibility for the property until after the owner’s death when the property is conveyed to that beneficiary. The beneficiary will receive an additional benefit of a step-up in basis, in addition to the grant of the real property. The basis for the beneficiary will be the fair market value of the real property upon the date of the owner’s death. To finalize the transfer, upon the death of the real property owner, the beneficiary of the transfer on death deed will need to record a simple Affidavit of Survivorship with the county recorder to complete the transfer of title of the property from the owner to the beneficiary.

Securing a Transfer of Death Deed

The use of a transfer of death deed can be useful if the goal is to keep a home out of the probate process, and can work in conjunction with a will or trust. Additionally, a transfer on death deed may be used to transfer an owner’s real property to a revocable or irrevocable trust upon the death of the owner. Both options can be very beneficial in the estate planning process. The Estate Planning Group at CCHA offers comprehensive estate planning services. Please consult with one of our experienced estate planning lawyers today.