Minnesota’s relatively new Transfer on Death Deed (TODD) -- a so-called “Will substitute for real estate” -- works best when the property owner has a simple distribution plan in mind for the owner’s real property at death.
Historically in Minnesota, when one person owned a piece of real estate and then died, a probate action was automatically required. By authorizing TODDs effective August 1, 2008, the Minnesota Legislature created the opportunity to avoid probate. In other words, if the TODD is executed correctly, no probate action is triggered simply by the ownership of real estate.
To be effective, a TODD must be recorded prior to the property owner’s death. Importantly, the intended beneficiary of the property has no rights in the property until the current property owner dies. Therefore, the property owner can revoke an existing TODD. The property owner can also change his or her mind about who the beneficiary or beneficiaries should be, and draft a new TODD. And, the property owner can decide to sell the property instead of keeping it for his or her intended beneficiaries, and take the sale proceeds. If a sale occurs, an existing TODD is void.
The TODD must expressly state that it is only effective on the death of one or more of the property owners, and must identify the property owner or owners whose deaths trigger the transfer. The wording on a TODD must be carefully considered or it may not work as intended. A TODD can be an effective tool under the right circumstances, but legal assistance should be sought in drafting the deed language.
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