July 6th, 2010
In Minnesota, if an individual owns real property individually or as a tenant in common, upon that individual’s death, his estate must be probated. In such a case, the real property will pass either through the provisions of the individual’s last will and testament or through the laws of intestacy (i.e., the law of succession when an individual dies without a last will and testament). A Transfer on Death Deed (TODD) is a useful probate avoidance tool that allows an owner or owners of real property to transfer that real property to a specified beneficiary or beneficiaries outside of probate. TODDs have the following features:
- The Grantor must record the TODD with the county recorder or registrar of titles during his lifetime. Once recorded, the TODD only becomes effective upon the death of the Grantor. During his lifetime, the Grantor retains the ability to use, lease or transfer the real property. If the Grantor sells the real property before his death, the TODD ceases to be effective.
- Property owned in joint tenancy can be transferred by a TODD, with the transfer becoming effective upon the death of the second joint tenant. For example, husband and wife own their residence in joint tenancy. Husband and wife name their son as the beneficiary under a TODD. Son will take ownership of the real property only after both husband and wife die. If husband dies first, his interest in the real property passes to wife as surviving joint tenant. Wife may use, lease or transfer the property during her lifetime.
- The Grantor may revoke the TODD at any point by recording a revocation with the county recorder or registrar of titles.
- The beneficiary takes the property subject to existing liens and encumbrances, including mortgages, judgments, and medical assistance liens.
- The TODD is exempt from state deed tax.