Q: Can an individual transfer real estate, such as a house and property, and avoid probate administration upon death without creating a trust to do so?
A: Yes. An Ohio law allows individuals who do not need the estate administration benefits of a trust to avoid probate to transfer real estate by executing a Transfer-On-Death (TOD) Designation Affidavit.
Q: What is a TOD Designation Affidavit?
A: A TOD Designation Affidavit is an “effective upon death deed” allowing the property owner to directly transfer the ownership of real estate upon the owner’s death to whomever the owner designates by name.
Q: How does it work?
A: The TOD Designation Affidavit, when recorded, permits the direct transfer of the described property to the designated beneficiary upon the death of the owner, avoiding probate administration. The recording of the transfer is accomplished by filing a death certificate and an affidavit in the Recorder’s office; the affidavit is signed by any person knowing the facts, and that person may be the designated beneficiary. However, a TOD Designation Affidavit does not eliminate any Ohio or federal estate taxes that otherwise would have been payable.
Q: Can the person who is designated as the TOD beneficiary claim an interest in the real property before the owner dies?
A: No; the designated beneficiary has no rights during the owner's lifetime. The law specifically provides that the affidavit designating the beneficiary has no effect on the present ownership of real property, and a person designated as a TOD beneficiary has no interest in the real property until the death of the owner(s) of the interest.
Q: Does the law allow for more than one beneficiary?
A: Yes; the law permits the designation of “one or more other persons identified in the Designation Affidavit by name.” Because the individual(s) (or trustee[s]) must be named, a designation of “my children” would not be valid.
Q: What if the TOD beneficiary dies before the owner?
A: A contingent TOD beneficiary can be designated. For example, the TOD beneficiary could be “Mary Smith, if living; otherwise John Smith.” If no named beneficiary is living at the time of the owner’s death, the real estate becomes part of the owner's probate estate.
Q: Can an individual who owns property with a “joint and survivorship” title execute a TOD Designation Affidavit?
A: Yes; individuals who own property titled as “joint and survivorship” can execute a TOD Designation Affidavit, but upon the death of such an individual, the property passes to the surviving survivor-owner(s); only upon the death of the last surviving survivorship tenant does property pass to the TOD beneficiary or beneficiaries designated in the affidavit. The last survivorship tenant, however, must join in the affidavit.
Q: How can a TOD Designation Affidavit be created?
A: Consult an attorney to prepare a TOD Designation Affidavit. Provide the attorney with a copy of the current deed and the name of the intended beneficiary(ies) and contingent beneficiaries.
Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association (OSBA). This article was prepared by John W. Eilers of Wood & Lamping LLP in Cincinnati.