In Oklahoma a simple form called a Transfer on Death Deed allows the owner of property to pass it on to another person without a Will, Trust or probate court.  (I’ll occasionally use the abbreviation TODD in this post.)

The form is very simple to create.  All you need to know is:

  • Your name and address
  • The name of the person you want to receive the property
  • Which property you want to transfer

Here is how the Transfer on Death Deed works:

Step 1) After the deed is created, the owner or owners sign it before two disinterested witnesses and a Notary Public.

Step 2)  The deed is filed with the county clerk (recorder of deeds) in the county where the property is located.

Step 3) Within 9 months after you pass away, your beneficiary accepts the property by filing a form with the county clerk with a copy of your death certificate.

Step 4) Once the form accepting the property is filed, the property becomes your beneficiary’s property.

Common Questions:

 What does it cost to set up a Transfer on Death Deed?  Click Here for Pricing

Answer:  If you use the Transfer on Death Deed package from Winblad Law, you will receive:Here are questions commonly asked about Transfer on Death Deeds:

If there is a mortgage or lien on the property, will the person inheriting it become personally liable for the debt?

Answer:  No.  The person inheriting the property is not personally responsible to repay the debt.  The creditor may have the right to foreclose  against the property only.  If the value of the property is greater than the amount owed on it; the property could be sold and your beneficiary would be entitled to the difference between the amount owed and the purchase price.  Your beneficiary could also pay off the lien and own the property free and clear. They could also sell the property but the lien holder would be entitled to the outstanding balance.

What happens if the Transfer on Death Deed  beneficiary I name dies before me?

Answer:  If a beneficiary dies before you, his or her gift lapses (disappears).  His or her children, wife cannot accept the property.  If you name two beneficiaries and one dies, then the surviving beneficiary is able to claim the entire property.

What happens if the Transfer on Death Deed beneficiary does not claim the property by filing the paperwork within 9 months of my death?

Answer:  In that case the property becomes part of your estate for probate if title is in your name.

Can I change my mind about the Transfer on Death Deed ?  If so what do I do?

Answer:  Yes.  You can revoke the Transfer on Death Deed; create a different Transfer on Death Deed; or transfer the property by gift or sale.  You do not need permission or even notice to the beneficiary.  (Caution:  A Will does not override Transfer on Death Deed even if the Will was made after the TODD.)

Does the beneficiary I name have an ownership interest?  If he has tax, judgment, divorce or credit problems am I affected?

Answer:  No, the beneficiary has absolutely not ownership interest until you die and they file the paperwork.  Therefore, none of their financial problems will affect your property while you are alive.

I own the property with somebody else; can I still use the Transfer on Death Deed?

Answer:   Yes.  1) Both can sign the same TODD.  2) If only one signs and the property is owned as “Joint Tenants” with right of survivorship (usually held by a husband and wife) and you die first; then the rights of the beneficiary lapse.  If you die last, your beneficiary can claim the property. 3)  If you own the property as “tenants in common” (often this is property that two or more children have inherited), then your beneficiary can accept the property and will have your share.  This is a little complicated and a short visit with an attorney is a good idea.

Can I use the Transfer on Death Deed as a prenuptial tool?

Answer:  Yes, sort of.  If a Transfer on Death Deed is signed and filed before you get married and you die, your new spouse cannot demand the property be part of his or her “forced share”.  This means that your spouse cannot become the owner of that property.  However, if the property is where you live (homestead) it is unclear whether the widow might be able claim a spousal homestead that allows him or her to continue to reside there.  The TODD is not useful for planning for a potential divorce.

Do I need to change my Last Will if I create a Transfer on Death Deed?

Answer:  No, but you might want to.  If your Will gives the property to one person but the Transfer on Death Deed gives it to another, only the person named in the Deed can claim it.  If the person named in the Transfer on Death Deed fails to claim it within 9 months, the property is administered according to your Will.

How is a Transfer on Death Deed different from a Trust?

Answer:  Although it avoids probate a TODD  does not have the same advantages as a Trust.  Most Trusts will have contingencies built in.  For example, if a beneficiary dies before you, the Trust can provide that his or her children are to receive the inheritance.  Currently, Oklahoma’s the TODD does not provide for such contingencies.  If a beneficiary does not accept the property within 9 months the gift lapses, however a Trust does not have beneficiary to act.  A Trust can provide asset protection for a beneficiary. Therefore, a Trust can provide many more safeguards than a TODD.

Will the gift be subject to taxes?

Answer:  There is no gift tax because the transfer does not complete when the TODD is signed.  Oklahoma has no Estate Tax or Inheritance Tax.  As of 2017 estates under $5.49 million ($5,490,000) are not subject to Federal Estate Tax.  If your estate is over $5.49 million, then the gift would be include-able in your estate tax.  An inheritance is not income for state or federal income tax purposes.

If there is a mortgage or lien on the property, will the person inheriting it become personally liable for the debt?

Answer:  No.  The person inheriting the property is not personally responsible to repay the debt.  The creditor may have the right to foreclose the lien against the property only.  If the value of the property is greater than the amount owed on it; the property could be sold and your beneficiary would be entitled to the difference between the amount owed and the purchase price.  Your beneficiary could also pay off the lien and own the property free and clear.

How do I set up a Transfer on Death Deed?

Answer:  You just need to know who you want to receive the property, have the forms completed and filed. Packages available, Click Here

What are the disadvantages of using a Transfer on Death Deed?

Answer:  There are several reasons a person may want to use a Trust instead of a TODD, Uncertainty, the TODD plan fails if:

  1. The beneficiary
    1. dies first and you would have wanted his or her children to inherit;
    2. does not or is physically or mentally unable to accept the property;
    3. is on a needs based program such as SSI disability, Medicaid or Food Stamps receipt of the property could affect eligibility to these programs; and
    4. has financial issues such as bankruptcy, credit issues, a divorcing spouse, tax or judgment liens, receiving the property may subject it to liens or liquidation.
  2. Contingencies, a Trust provides the probate avoidance but can also provide more comprehensive planning.

If these are concerns consider a Trust.

How is a Transfer on Death Deed different from a joint tenancy?

Answer:  A joint tenancy avoids probate.  Unlike a TODD, there is no time limit for the survivor to claim total ownership of the property.  However, adding others to your property with a joint tenancy gives them an immediate ownership interest that can be subject to bankruptcy, creditor, tax and divorcing spouse claims.  If you want to sell, mortgage or gift the property, the other joint tenants must agree and sign the paperwork.

What does it cost to set up a Transfer on Death Deed?

Three comprehensive “Beneficiary Ready” packages are available.  Click Here

 

 

See Nontestamentary Transfer of Property Act

Summary
About Richard Winblad

Richard Winblad is a lifelong Oklahoma City Metro resident with a law practice focused on Elder Law and Estate Planning. His practice focus helping seniors and veterans by giving sound legal estate planning advice including Medicaid Estate Planning and Veteran’s Benefit Qualification. In 1984, Richard graduated from OSU with an undergraduate degree in Business he later sought and earned a Law Degree from the University of Oklahoma in 1992. His practice is based in Edmond and is held in a beautiful pre-statehood home close to UCO at 102 E. Thatcher. He is president of the Oklahoma City Commercial Lawyers Association, a group that provides legal an ethical training for attorneys. He is also a member of “Lawyers with Purpose”, an organization that provides in depth training and support to attorneys who practice in the area of elder law. He received an AV Preeminent® rating by his peers through Martindale-Hubbell® Peer Review Ratings™. Dedicated to educating the public, Richard does workshops and presentations all around the state for professionals and laypersons. These programs provide vital information to our veterans and seniors as they look forward in planning living and financial needs that fit their desires.

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