Transfer on Death Deeds Law Enacted in New York

One of the biggest problems with avoiding probate was that you could not put a beneficiary designation on property. New York State has changed that. 

As of July 20, 2024, New York allows Transfer on Death (“TOD”) deeds. If you have a living trust, you don’t need this new deed. While this new deed provides a simpler way to transfer property, please note the disadvantages listed to see if a TOD deed is right for you.

There are numerous advantages and disadvantages to TOD deeds which you should discuss with a New City estate planning attorney.

How does a New York Transfer on Death (TOD) Deed work?

The TOD deed transfers your real estate, subject to any liens or mortgages (or other encumbrances) upon your death. Probate or estate administration is not required. 

The TOD deed has no effect until you die. You can revoke it at any time. You are also free to transfer the property to someone else during your lifetime. If you sell or transfer ownership of the New City real estate property, the beneficiary designation will have no effect. A TOD deed only takes effect when it is recorded at the County Clerk.

Can I later revoke the New York TOD deed if I change my mind after it is recorded?

Yes. You can revoke the TOD deed. No one, including the beneficiaries, can prevent you from revoking the deed. There are three ways to revoke a recorded TOD deed:

• Sign a TOD deed revocation form and record it with the appropriate county clerk.
• Sign a new TOD deed that names a new beneficiary and record it with the appropriate county clerk..
• Transfer the property to someone else during your lifetime by a recorded deed that expressly revokes the TOD deed. 

Am I required to notify the beneficiaries if I have a New York TOD deed?

No, but it is recommended. Secrecy or failure to communicate your wishes can cause later complications and might make it easier for others to commit fraud. Read more in our article, Do Family Secrets Hurt Estate Planning?

Advantages of a Transfer on Death (TOD) Deed in New City

Avoidance of Probate: Unlike property solely governed by a will, property transferred via a TOD deed does not go through the probate process. 

Maintain Control: Owners retain complete control over the property during their lifetime. They can sell or encumber the property as they see fit without needing the consent of the designated beneficiary.

Revocability: New City real estate owners can change their minds at any time prior to their death, offering flexibility if their circumstances or intentions change. However, if multiple owners signed a TOD deed, they must all revoke it.

Straightforward Process: Establishing a Transfer on Death Deed is less complex and costly than setting up a living trust. It requires fewer formalities while still allowing owners to specify their beneficiaries directly.

Disadvantages of a Transfer on Death (TOD) Deed in New City

Despite the benefits, TOD deeds have limitations that make them unsuitable for some estate planning objectives:

Lack of Control Over Succession Details: Once the property transfers on death, there is no one officially in charge of managing or selling the property, like an executor or trustee. This can lead to potential disputes among beneficiaries regarding the use or sale of the property.

Only a Simple Plan. The TOD deed does not allow for nuanced succession planning. If parents were to name son and daughter to inherit the house, and son dies in a care accident with the parents, then 100% of the house would go to the daughter and zero would go to the son’s children. Transfer on death deeds do not allow for the common per stirpes allocation in New York to the beneficiary’s children.

Minors Cannot Benefit: A TOD deed will not be beneficial for parents with young children since minors cannot own real property. The property must be in trust for their benefit.

Multiple Owners and Beneficiaries Can Cause Complications and Confusion. If tenancy-in-common owners transfer their individual interests, they can name their own beneficiaries for their portion of the property. The potential for multiple owners and multiple beneficiaries can make the TOD deed very complicated, leading to disputes over the sale of the property.

Estate Claims. If the transferor’s estate does not have enough assets to satisfy creditor claims or statutory allowances to surviving spouses or children, a property subject to a TOD deed can be brought back into the estate to satisfy those claims.

No Asset Protection. A TOD deed is not Medicaid or long-term care planning. The grantor is still the owner of the property, and it is therefore a resource for Medicaid planning purposes. Transferring real property to an irrevocable trust (five years in advance), or to an exempt person, is still the only way to protect real property for Medicaid purposes.

Estate Recovery. Medicaid recovery and pay-back is limited to estate assets. Unlike assets held in a Trust that are not subject to estate recovery, a TOD deed provides that the property can be brought back into the estate to satisfy creditors.

Interpretations of the Law. The law is so new that interpretations and issues of its implementation have not all been resolved.

Speak with a Trusted New City Estate Planning Attorney to Protect Your Real Estate

Because real estate is often one of the biggest assets people own, it is essential to take careful steps to protect it. A trusted New City estate planning attorney can provide qualified guidance to ensure that you make the right choice based on your own financial situation and your wishes for your property after you pass. Book a call with Parker Law Firm if you have questions about the new Transfer on Death Deeds law in New York or how to create a plan that protects you, your loved ones, and your assets.