Understanding New York’s New Transfer on Death Deed

By Jeff Lender

On July 20th 2024, New York will introduce the Transfer on Death Deed (TOD) as an alternative method for the transfer of real estate. This development gives property owners another tool for estate planning and asset management. 

The Basics of Property Transfer in New York

Houses, condos, and vacant land are typically transferred by deed. Several types of deeds are used in New York depending on the circumstances:

1. Referee’s Deeds are used in property transfers following a foreclosure sale. They are managed by a court-appointed referee.
2. Administrator’s or Executor’s Deeds are most often utilized by a fiduciary appointed by the Surrogate’s Court. These deeds transfer estate property to the designated heirs or beneficiaries.
3. Standard Transaction Deeds can be Quitclaim or warranty deeds, or a bargain and sale deed with or without covenants, depending on the quality of the title. 

Introducing Transfer on Death Deeds

Transfer on Death Deeds will work similarly to Transfer on Death Designations for bank accounts, where the asset automatically passes to a designated beneficiary. Key points about TOD deeds include:

1. TOD deeds must be signed before two witnesses, then notarized and recorded in the county clerk’s office.
2. The property owner will have full control over the property, including the right to sell it or mortgage it. The property passes to the beneficiary subject to existing liens or mortgages.
3. Property owners can revoke a TOD deed at any time. 
4. Property owners can designate a new beneficiary by creating and notarizing a new TOD deed.
5. The property owner must have legal capacity. They cannot be under fraud, duress, or undue influence.
6. If the beneficiary does not survive the property owner, the transfer lapses until another beneficiary is named. 

Estate Planning with TOD Deeds

TOD deeds can simplify the probate process for estate planning, and allow a property holder to name beneficiaries on the deed. However, it’s essential to cover all of your bases. Consider other estate planning tools like title insurance to ensure comprehensive coverage.

Property owners get both flexibility and control when they transfer a property into a trust. For example, a living trust can be changed during the life of the property owner to specify who has the property after the owner’s death. When creating a TOD deed, make sure you designate alternate beneficiaries.

Legal Considerations and Assistance

The new TOD deeds in New York will spark various questions and potential complications. If you own property in the state, reach out to our NY title insurance agency to have your questions answered and find out how we can make sure you have comprehensive coverage.