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TOD Deed Law
The law creates a new type of deed form that permits a competent individual to sign a TOD Deed before a notary public and two witnesses. The deed must be recorded in the local county clerk’s office.
The new law does not change more traditional methods for passing real property without probate or by will. This includes a transfer to remainder persons with a retained life estate (Life Estate Deed) for a senior or lifetime trusts, such as the revocable living trust and the irrevocable (Medicaid) trust. Which is best for you depends on your circumstances.
The TOD Deed takes effect at death, much like a Life Estate deed. Among its benefits are that it does not trigger a gift tax and the transferring party (grantor) retains their own cost basis in the property, as well as control over the property during their lifetime.
Unanswered questions about the new legislation include:
• Taxes: It is expected, but not certain, that the recipients of the property at death will receive a step-up to date of death value for a new tax basis.
• Execution of the deed: Technical details of signing the deed, including who may act as a witness and other issues are not addressed in the law.
• Beneficiaries: It is not clear whether the TOD Deed may be given to a descriptive class of persons (for example, my living issue, per stirpes) or must be to specific persons.
• Medicaid: There is the open question of whether the TOD Deed will be deemed a transfer of assets resulting in a five year look back for nursing home-based Medicaid.
The TOD Deed may offer simplicity in allowing individuals to avoid probate, but before moving forward, it is important to speak with an attorney to evaluate whether this is the best option for your situation. Contact me for a legal consultation.
Polner Abrahams Law Firm
516-741-9175
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