A transfer on death (TOD) deed is like a regular deed you might use to transfer your Minnesota real estate, but with a crucial difference: It doesn't take effect until your death. At your death, the real estate goes automatically to the person you named to inherit it (your "beneficiary"), without the need for probate court proceedings. (Minn. Stat. § 507.071.)
You must sign the deed and get your signature notarized, and then record (file) the deed with the county recorder's office or county registrar of titles (see "Recording Your Deed" below to determine which) before your death. Otherwise, it won't be valid.
You can make a Minnesota transfer on death deed with WillMaker.
The beneficiary's rights. The person you name in the deed to inherit the property doesn't have any legal right to it until your death—or, if you own the property "as joint tenants" with someone else, until the last surviving owner dies. (More on this below.) The beneficiary doesn't sign the deed, but it's a good idea to let the beneficiary know you've recorded it. Otherwise, he or she might not know about it, even after your death.
The spouse's rights. If an owner is married, WillMaker requires the owner's spouse to sign the TOD deed as well—even if the spouse is not listed on the title of the property. This precaution helps the deed comply with Minnesota's laws. However, beware that by signing the deed, the spouse gives up rights to claim the property later.
Earlier wills or TOD deeds. If you have made a will or previous TOD deed that leaves the property to someone, your new TOD deed will override it.
Your rights. You keep complete ownership of, and control over, the real estate while you're alive. You pay the taxes on it, and it's not protected from your creditors. You can sell it, give it away, or mortgage it. Because you're not making a gift of the property, there's no federal gift tax.
Medicaid. Creating a TOD deed won't affect whether or not you are eligible for Medicaid. Because you own the property and are not actually giving it away during your lifetime, a TOD deed won't help you "spend down" your assets to help you qualify for Medicaid. Beware, though, that if you do end up receiving Medicaid benefits—for example, to pay for nursing home care—your home might be liable for reimbursement of Medicaid expenditures. If you have questions, consult a local attorney.
Other creditor claims. Your TOD beneficiary may be liable for the claims of your creditors, up to the value of the property they receive from you.
Revoking the deed. If you later change your mind about who you want to inherit the property, you are not locked in. You have two options: (1) sign and record a revocation or (2) record another TOD deed, leaving the property to someone else. You cannot use your will to revoke or override a TOD deed.
How ownership is transferred. To get title to the property after your death, the beneficiary must record the following documents in the county where the property is located: (1) an affidavit of identity and survivorship, (2) a certified death certificate, and (3) a clearance certificate (showing that the county will not seek reimbursement for medical assistance benefits). No probate is necessary.
Future ownership. WillMaker's Minnesota TOD deed states that it "conveys any and all interests in the described real property acquired by the Grantor Owner before, on, or after the date of this instrument." This means that the deed transfers not only the portion of the property the owner currently owns, but also any portion of the property that the owner might acquire in the future before the owner's death.
If you own the property with someone else, how to proceed depends on how you and the other co-owners hold title to the property. If you don't know how you hold title, start by looking at the deed that transferred the property to you. It might say, for example, "to Ellen Bauman and Edward M. Bauman, as joint tenants" or "to Jonathan G. Costa and Sandra L. White, as tenants in common."
There are two common ways to co-own property in Minnesota:
Joint tenancy (also called "joint tenancy with right of survivorship"). If you co-own real estate as joint tenants with right of survivorship, when one co-owner dies, that co-owner's share of the property will automatically go to the surviving co-owners. You can make a TOD deed together with the other joint tenants or you can make one on your own, but it's important to understand the difference.
When you make a TOD deed together with the other joint tenants, you are naming someone to receive the property after all of the joint tenants have died.
Example: Claire and Kendra co-own their home as joint tenants. They make a TOD deed together and name Oscar as the beneficiary. When Claire dies, Claire's half of the home goes to Kendra, who becomes the sole owner of the entire home. When Kendra dies, the home goes to Oscar under the TOD deed.
If you make a TOD deed on your own, without the other joint tenants, the deed will be effective only if you are the last surviving owner of the property. If you die first, the surviving co-owners will own the property, and the TOD deed won't have any effect.
Tenancy in common. If your deed doesn't state how you own the property, you and your co-owners are presumed to own it as tenants in common, unless you've agreed otherwise in writing. If you own your property as a tenant in common, you should create a TOD deed on your own (without the other tenants in common). That TOD deed will transfer only your share of the property to the TOD beneficiary when you die.
Example: Raymond and Jack, who are brothers, own a house together as tenants in common. Raymond signs a TOD deed that leaves his half-interest to his daughter. At Raymond's death, his daughter will become a tenant in common with Jack.
Your co-owners are free to make their own TOD deeds to transfer their individual shares of the property, and they may name the same beneficiary as you, or they may choose different beneficiaries.
If you're not sure how you co-own the property or whether or not your spouse has any rights to it, consult a lawyer.
Revoking a jointly made deed. In Minnesota, if two owners make a transfer on death deed together, a revocation by one owner will revoke the entire deed.
Note on trust property. If you hold real estate in a trust, you probably won't need to use a TOD deed, because trust property doesn't need to go through probate anyway. If for some reason you want to use a TOD deed instead, you'll probably need to transfer the property out of the trust first. Talk to a lawyer about your estate plan.
You can name anyone you please to inherit your real estate—a person, more than one person, or an organization such as a favorite charity. But if you want to name more than one person, or a minor, there are some issues you should consider.
More than one beneficiary. Before you name multiple beneficiaries on your transfer on death deed, make sure you consider 1) how the co-beneficiaries will hold title to the property after you die, 2) what will happen if one of the co-beneficiaries dies before you do, and 3) how the beneficiaries will feel about co-owning the property.
As to the first issue, when you make WillMaker's transfer on death deed for Minnesota, your property will transfer to your beneficiaries in equal shares with right of survivorship. In other words, your beneficiaries will own the property as joint tenants.
Example: You name Mina and Connor as your TOD beneficiaries. After you die, they will own the property as joint tenants with right of survivorship. Later, if Mina dies before Connor, Connor will own the entire property, and vice versa.
As to the second issue, if one or more of the beneficiaries dies before you do, their share or shares of the property will be transferred to the surviving beneficiaries.
Example: You name Tim, Stephanie, and Rebekah as your TOD beneficiaries. Tim dies before you do. Stephanie and Rebekah would each inherit half the property. They would own it as tenants in common, and are each free to sell or leave their half of the property to someone else.
Finally, think carefully about how your beneficiaries will feel about owning the property together. Co-ownership is cumbersome and often causes tension. For example, one co-owner could force a sale of the property even if the other co-owners didn't want to sell.
Children under 18. Think twice about naming a child under age 18 as a beneficiary. A child can take title to the property, but an adult will need to manage it.
When making a TOD deed with WillMaker, you can name an adult "custodian" under the Minnesota Uniform Transfers to Minors Act (UTMA) to manage the property. Under Minnesota's UTMA, the beneficiary becomes the outright owner of the property at age 21.
You may have other options for naming an adult property manager, including:
For more information, see Naming a Minor Beneficiary for Transfer on Death Deeds. For help setting up a property management method, consult a qualified estate planning lawyer.
The 120-hour rule. Your transfer-on-death deed will be subject to Minnesota's 120-hour survival rule, which states that your beneficiary must survive you by 120 hours (or 5 days) to receive the property. The goal of this survivorship rule is to prevent your property from going to your beneficiary's beneficiaries—rather than to your own beneficiaries—if you and that beneficiary die close in time.
Example: Sarah uses a transfer-on-death deed to leave her house to her brother Juan. Her deed states that the deed is canceled if Juan does not survive her. If Sarah and Juan are in a car accident together and Sarah dies on June 10, and Juan dies on June 12, the 120-hour rule means that the deed will be canceled, and the house will go to Sarah's residuary estate. (If the 120-hour rule were not in place, Sarah's house would go to Juan's estate rather than her own.)
Several kinds of legal descriptions are used in Minnesota. Just copy what's on the previous deed that transferred the property to you. Here are two examples:
If the legal description is too long to safely type out (they can even run several pages long), simply photocopy or scan and print it, and attach it to the transfer on death deed as "Exhibit A."
Minnesota has two separate land record systems. One system is for property known as "abstract property." Deeds for abstract property are filed with the county recorder. The other system is for property known as "Registered" or "Torrens" property. Deeds for Torrens property are filed with the county registrar of titles. How do you know which system your property is in? Call your county's office of the recorder or registrar of titles to find out. You'll need to supply identifying information about your property, such as the address, legal description, or a property ID number, for the clerk to look up your property. The clerk can also help you file your deed in the correct system.
Accurate, plain-English legal information can help many people create useful legal documents. But general information is never a substitute for personalized advice from a knowledgeable lawyer. If you want professional advice about the best way to craft or use legal documents in your particular circumstances, consult an attorney licensed to practice in Minnesota.