New York has joined the majority of U.S. states in authorizing a Transfer on Death Deed (TOD Deed) for real property. The new law gives New York homeowners a powerful tool: a way to pass real property to a named beneficiary at death outside of probate, while preserving the step-up in basis at death and without giving up any control during life.
It is a useful new option, but — like every estate planning tool — not the right answer for every situation. Below: how the TOD Deed works, what it does well, what it doesn’t do, and how it fits the rest of your plan.
How a TOD Deed works.
You sign and record a deed that names one or more beneficiaries to receive your property at your death. Nothing changes during your life. You remain the full owner. You can sell, refinance, mortgage, lease, or revoke the TOD Deed at any time. The named beneficiary has no current interest — only an expectancy that vests at your death.
When you die, the property passes to the named beneficiary by operation of the deed. The beneficiary records a death certificate and a short affidavit, and title transfers without any court involvement. No probate, no surrogate’s court file for that asset, no months-long delay.
What a TOD Deed does well.
Avoids probate for the home. For most New York families, the family home is the largest single asset that would otherwise have to be probated. A TOD Deed pulls it out of the probate estate cleanly.
Preserves the step-up in basis. Because the property passes at death rather than during life, the beneficiary takes a fresh income-tax basis equal to the date-of-death value. If the property has appreciated significantly, this can save the beneficiary substantial capital gains tax when they later sell. This is the central advantage of a TOD Deed over alternatives like adding a child to title or transferring outright during life.
Simple and reversible. Unlike a transfer to a trust or a lifetime gift, you don’t change ownership today. You don’t need to refinance through your lender (typically). You can change your mind. Naming a different beneficiary is a matter of recording a new deed.
Cheap. Recording fees aside, the TOD Deed is one of the least expensive probate-avoidance tools available.
What a TOD Deed does not do.
It doesn’t avoid creditors. A TOD Deed beneficiary takes the property subject to mortgages, liens, and (under New York law) potentially subject to creditor claims of the estate.
It doesn’t handle incapacity. A TOD Deed transfers at death, not on incapacity. If you become incapacitated before death, the property is still yours — meaning your durable power of attorney needs to be in place to manage it.
It doesn’t replace a will or trust. A TOD Deed handles one asset. Everything else — retirement accounts, life insurance, brokerage accounts, personal property, business interests — needs the rest of your plan to handle them. Most clients who use a TOD Deed still need a will, a healthcare proxy, and a durable POA.
It can fail if the beneficiary predeceases you. Unless the deed contains a contingent beneficiary or surviving-issue language, the property may revert to your estate (and back into probate) if the named beneficiary dies before you. We typically draft TOD Deeds with explicit contingencies.
It doesn’t solve a multi-beneficiary problem. A TOD Deed naming multiple beneficiaries leaves them as co-owners of the property — each owning an undivided fractional interest. If they don’t agree on what to do with the house, you’ve replaced a probate problem with a partition problem. For multiple beneficiaries who need to share the proceeds of a home, a revocable trust with a sale-and-distribute provision is often a better answer.
TOD Deed vs. revocable trust vs. joint ownership.
Adding a child to the deed. The classic do-it-yourself probate avoidance — and a frequent mistake. It exposes the property to the child’s creditors and divorce. It is treated as a partial gift today (potential gift tax filing). And, critically, it loses the step-up at your death on the gifted portion. The TOD Deed avoids all three problems.
Revocable trust. A revocable trust does everything a TOD Deed does and more — it handles incapacity (the successor trustee can act), it handles multiple assets in a coordinated way, and it allows for sale-and-distribute or hold-and-manage provisions. The tradeoff is cost and complexity. For a single-asset, single-beneficiary case, a TOD Deed may be enough. For more complex situations, a trust is usually better.
Will only. A will sends the property through probate. Probate in New York is workable but adds 6-18 months and material cost. The TOD Deed is faster and cheaper for the property — though, as noted, you still need a will for everything else.
When does a TOD Deed make sense?
Often: a single asset (the home), a single beneficiary (one child or a spouse), no creditor or tax-planning complexity, and a desire to keep things simple. For these clients, a TOD Deed paired with a will, durable POA, and healthcare proxy is a clean, modest plan.
Less often: complex families, multiple properties, blended-family issues, charitable bequests, beneficiaries who need protection from themselves or their creditors, or estates near the New York or federal estate tax thresholds. For these clients, the trust is usually the right vehicle, and a TOD Deed can be one piece of a larger structure.
Quick FAQ.
Do I need an attorney to do a TOD Deed? Technically no, practically yes. The deed has specific recording and form requirements, and the contingent-beneficiary drafting matters more than people realize. A botched TOD Deed sends the property right back into probate — the exact thing you were trying to avoid.
Can I revoke it? Yes, at any time, by recording a revocation or a superseding TOD Deed. Your beneficiary has no vested right during your life.
Will my mortgage company object? Typically not, since you remain the owner during life. The due-on-sale clause is generally not triggered. But check your loan documents and, if there’s any concern, raise it with the lender before recording.
What if my beneficiary dies before me? If you named a single beneficiary with no contingent beneficiary, the TOD Deed lapses and the property passes through your estate — back into probate, the exact result you were trying to avoid. This is why contingent and successor beneficiaries are not a drafting flourish; they’re the whole point. A well-drafted TOD Deed names alternates and addresses what happens if the beneficiary predeceases you.
Is a TOD Deed the right tool for me? Sometimes. Schedule a consultation and we’ll walk through whether a TOD Deed, a revocable trust, or some combination is the right fit.