Law Outside the Box

Under Minnesota law, the transfer of the real estate with a TODD becomes effective only after the death of the real estate owner.  In other words, if your mother Doris has a TODD prepared and filed today designating her home to you, the transfer of her home to you does not happen until after your mother Doris passes away.  This is assuming that your mother Doris still owns her home at the time she dies and that she has not otherwise revoked the TODD. 

For your mother Doris, it is important to note that she can still sell the home at any time regardless of the existence of the TODD.  She should also know that she can revoke the TODD at any time as long as she files a TODD revocation form with the County to cancel the TODD she prepared.

For more information, see Minn. Stat. § 507.071.

If you decide to revoke your TODD, you must file and record the TODD revocation document before you die.  In other words, if you have the TODD revocation document prepared while you are alive but rather than file it with the County, you decide to hold onto it in your safe, it is as though the document was never prepared.  Why?  Because it must be filed and recorded before you die to be valid.  After you pass away, it is illegal for your next-of-kin to then file a TODD you signed while you were still alive.

For more information, see Minn. Stat. § 507.071.

Yes, as long as you are still alive (and competent).  You can revoke or change your TODD whenever you wish.  In our illustration above, we see how one former beneficiary has been locked out from his inheritance!  There will be no entry for Michael at these gates.

Let’s say you prepared and filed a TODD naming your two children, Michael and Homer, as beneficiaries of your home.  Two years from now, you decide that you would prefer to give your home to your new wife, Matilda, when you pass away.  You can file a document with the County to revoke the TODD and there is nothing your children Michael or Homer can do to prevent it. 

In the alternative, you can file a new TODD naming your new wife Matilda as beneficiary.  That new TODD naming Matilda will trump the earlier TODD naming your children as beneficiaries of your home.

The best method to handle a situation like this is to file a document with the County revoking the TODD naming your two children as beneficiaries.  Then after that document is filed, submit a new TODD naming your new wife as beneficiary.  That way, you reduce any potential confusion regarding your true intentions.

Note: a revocation of the TODD must be recorded with the County prior to your death if you are wishing to have the original beneficiaries removed but not replaced. 

For more information, see Minn. Stat. § 507.071.

If all beneficiaries designated in the Transfer on Death Deed (TODD) die before you, no transfer shall occur and the TODD is void.  It is important to note this because I have prepared a number of TODDs for clients where they have named a single beneficiary such as an only child and not taken into account if that child predeceases the client, then the TODD becomes void.  Of course there are solutions around this dilemma. 

To maximize the effectiveness of the TODD, it is recommended that you monitor the situation periodically to ensure that the TODD is still valid for the purposes you have intended.  This may include having back-up beneficiary designations as well as other more traditional methods like using a trust to ensure that your wishes are carried out as you intended.

For more information, see Minn. Stat. § 507.071.

No and no.  You do not need to notify your beneficiary that they have been named a beneficiary in your TODD.  You do not need to obtain their consent either.  In fact, under the law, you don’t have to disclose to anyone who the beneficiary is.  The beneficiary may not end up having any knowledge whatsoever until after you pass away. 

However with that said, I believe it would be prudent in many cases to notify the beneficiary while you are preparing the TODD just so that the beneficiary is in the loop.  That way, if necessary, the beneficiary can prepare to accommodate receiving any real estate to be designated to them.

For more information, see Minn. Stat. § 507.071.

Yes.  As the owner of the real estate, you still can sell or transfer the real estate whenever you like.  This is true even with the existence of a TODD on your real estate.  You don’t need approval of the person who you were going to designate the real estate to under the TODD.  You don’t have to file anything with the County to notify them that the TODD is no longer effective.  It will self-cancel by the fact that you don’t have the real estate in your ownership at the time of your death.

For example, let’s assume your mother Doris has a TODD prepared and filed today designating her home to you.  A year from now, your mother Doris decides to sell her home and move into a nursing home.  She does not need to obtain your approval to sell her home.  She does not need to notify the County that she is selling her home as it relates to the TODD on file (although she could notify the County as a courtesy).  With a Transfer on Death Deed, you have complete flexibility to maintain 100% control over your real estate until you die.

For more information, see Minn. Stat. § 507.071.

In August 2008, Minnesota enacted a law that allows people to transfer the ownership of their real estate through the use of a beneficiary designation.  The objective is to enable that piece of real estate to avoid going through probate.  For those of you who have experienced the loss of a loved one and traversed through the process of probate, in many situations, probate can be expensive and time-consuming. 

More often than not, the reason behind the lengthy process of probate relates to real estate owned by the decedent.  For the majority of people, the most significant asset in their estate is the home they own.  A Transfer on Death Deed (TODD) is quickly becoming the estate planning tool of choice to transfer real estate.

In the next several posts, I will answer questions regarding various aspects of Transfer on Death Deeds (TODDs). 

For more information, see Minn. Stat. § 507.071.