In New Mexico (and a handful of other states), the law permits an owner of real property (either land or a house) to transfer that property by a Transfer on Death Deed (TODD). A TODD is a simple and effective way to transfer property to a beneficiary without the hassle of probating the estate to obtain possession of said property.
After a TODD is executed, the owner retains all their rights and interest in the property; they can revoke, change, or amend the deed at any time. The TODD does not become active until the owner dies. However, it must be properly drafted, signed, and recorded with the county clerk for it to be effective at the owner’s time of death.
What happens if the owner of the property is a joint tenant?
If the owner is a joint tenant with a right of survivorship, the joint tenancy is not impacted by the TODD. For example, if a husband and wife own a house, they can draft and execute a TODD transferring the property to their child. If the husband passes before the wife, she will own the house until she passes. The TODD will only be active after she passes, and it will then be used to transfer the house to the child. The child must present both parents’ death certificates to the clerk’s office in order to obtain ownership of the property.
What if there is still a mortgage or lien on the property?
If there is a mortgage or lien on the property, that interest will be transferred over to the new owner. Consider this before using a TODD for transferring property.
What happens if the decedent has a will?
A TODD controls over a will, and a TODD will often dictate how the property will be transferred even if the will says something different. This ensures that the beneficiary will receive the property regardless of any contradictory claims.
Although wills and trusts are effective and useful estate planning tools, if you own a single home or just one parcel of land, and do not have a trust or will, consider using a TODD to transfer your property simply and easily without the hassle of probate.
Note: you should check to see if your state permits TODD before you draft one!
When should you consider a TODD?
1. You own a single home or a parcel of land that you want to transfer to a specific beneficiary.
2. You own multiple parcels of land but want a specific parcel to be transferred to a specific beneficiary.
3. You do not have a trust or a will, but you own a property, and you want that property to be transferred to a specific beneficiary.
4. Your only asset is your house and that is all you need to transfer.
There are a multitude of other reasons why a TODD might be beneficial to you. If you are unsure about your situation, or you have more questions, set up a consultation with one of our attorneys today.
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