A designation of transfer on death (TOD) beneficiary (commonly called a transfer on death deed in other states) works similarly to a deed you might use to transfer your Wisconsin 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. (Wis. Stat. § 705.15.)
You must sign the TOD designation and get your signature notarized, and then record (file) the designation with the county register of deeds before your death. Otherwise, it won't be valid.
You can make a Wisconsin designation of transfer on death beneficiary with WillMaker.
The beneficiary's rights. The person you name in the TOD designation to inherit the property doesn't have any legal right to it until your death—or, if you own the property as a "joint tenant" or with "rights of survivorship" with someone else, until the last surviving owner dies. (See "Special Rules for Co-Owned Property," below.) The beneficiary doesn't sign the designation, 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 and the property being transferred is marital property, Wisconsin requires the owner's spouse to sign the TOD designation as well—even if the spouse is not listed on the title of the property. (See Making a Wisconsin TOD Designation When You Co-Own Property.) However, beware that when non-owner spouses sign the TOD designation, they might be giving up rights to claim the property later.
Earlier wills or TOD designations. If you have made a will or previous TOD designation that leaves the property to someone, your new TOD designation 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 during your lifetime, there's no federal gift tax.
Medicaid. Creating a TOD designation (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 designation 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 beneficiary takes the property subject to the mortgages, liens, and other claims on your property that existed at your death. But there's a deadline for your creditors: they must file a legal complaint within 120 days of your death.
Revoking the TOD designation. If you later change your mind about whom 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 designation, leaving the property to someone else. You cannot use your will to revoke or override a TOD designation.
How ownership is transferred. To get title to the property after your death, the beneficiary must complete a form called a Termination of Decedent's Interest (Form TOD-110). The beneficiary must record this form with the county register of deeds, along with a copy of the TOD designation you recorded and an electronic real estate transfer return receipt. (Although this receipt is required, the property is exempt from paying the transfer fee under exemption 11m.) Some counties also require a certified copy of the death certificate and a copy of the property tax bill for the year before the death.
If you own the property with someone else, how to proceed depends on how you and the other co-owner(s) hold title to the property. Co-ownership in Wisconsin is very complicated. For guidance, read Making a Wisconsin TOD Designation When You Co-Own Property, which will walk you through the process of (1) determining how you co-own the property and (2) whether you should make a TOD designation with your co-owner or alone.
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 TOD designation, 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 designation for Wisconsin, your property will transfer to your beneficiaries in equal shares with no right of survivorship. This is the default under Wisconsin law. In other words, your beneficiaries will own your property as tenants in common and each beneficiary will be free to leave his or her share to someone else or to sell that share of the property.
Example: You name Tim, Stephanie, and Rebekah as your TOD beneficiaries. After you die, they will own the property as tenants in common. Tim leaves his one-third share of the property to his son Cameron in his will. Stephanie sells her one-third share of the property to Anya. After Tim dies, Cameron, Anya, and Rebekah own the property.
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 designation with WillMaker, you can name an adult "custodian" under the Wisconsin Uniform Transfers to Minors Act (UTMA) to manage the property. Under Wisconsin'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 a Transfer on Death Deed. For help setting up a property management method, consult a qualified estate planning lawyer.
Your transfer on death designation must identify your property using the legal description of your property. You can find this legal description on the previous deed that transferred the property to you—look for it in the body of the deed or in an "attachment" or "exhibit" to the deed. 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 designation as "Exhibit A."
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 Wisconsin.