Effectively Drafting Transfer on Death Deeds in New York

As of July 19, 2024, New York State has legalized the ability for property owners to execute a Transfer on Death (“TOD”) Deed to one or more beneficiaries which will become effective upon the death of the Grantor.

The text of the law is found here (“NY TOD Deed Law”), and there are two points that should be highlighted:

1. The TOD or beneficiary deed is inherently revocable. Thus, the Grantor may revoke the TOD Deed in one of three ways a) complete and acknowledge the proper revocation form and record it in the proper county; b) complete and acknowledge a new TOD Deed and record it in the proper county; or c) transfer the property to a new owner that expressly revokes the TOD deed.
2. The Grantor (or owner of the property) retains the ownership interest and still may sell the property during their lifetime.

Effective use of these TOD Deeds in conjunction with other estate planning strategies may enhance the ease of estate administration for folks who are looking to avoid probate of their estates. In some specific cases we are able to save our clients fees by avoiding the use of a revocable trusts when a client may have just one property and that property is located within New York. Although there seemed to be some fear surrounding possible fraud involved with these deeds, which is a valid concern in my mind, ethical use of these deeds can potentially enhance the ease of the burden of a loved one passing away.

Pitfalls exist. I do not view these deeds as a solve all or a will replacement, but just a potential tool.