PodcastAvoiding probate is often an important goal for many estate planning clients. Probate is the court-supervised process of administering a deceased person’s estate and transferring their property at death pursuant to the terms of their will. The executor of an estate must ordinarily wait until the court grants them the authority to transact with estate assets before any assets can be sold. This can be particularly costly when a decedent owns an interest in real property, as the executor will not be able to sell the property until they are appointed by the court. In the interim, which could take months, the estate remains responsible for paying the carrying costs on the real estate. One new option set to be available in New York is a transfer on death dead.
Section 424 of the New York Real Property Law is set to go into effect on July 19, 2024. This new section is titled, “Transfer on Death Deed Law,” and was adopted by New York State on April 20, 2024. The Transfer on Death Deed Law permits an individual to transfer property to one or more beneficiaries effective at the transferor’s death by a transfer on death deed. This will allow for an individual to avoid probate and specifically choose who will automatically inherit their property upon their death. The transfer on death deed does not give the beneficiary any control over or claim to the property while the transferor is still living. New York will be joining the majority of states in adopting this law as more than 25 states currently have some version of a transfer on death deed.
There are several requirements needed to create a transfer on death deed. First, the transferor needs to complete a transfer on death deed form. This must be done in the presence of two witnesses. Additionally, the transfer on death deed needs to be acknowledged by a notary public and recorded before the transferor’s death in the public records in the county clerk’s office of the county where the property is located. This makes the transfer on death deed public. It is important to note that the capacity required to make a transfer on death deed is the same as the capacity required to make a will.
The typical transfer on death deed document will contain the owners name, the property’s address, and a detailed description of the property. It will also have the name of the beneficiary who will take ownership of the property after the transferor passes, and have a statement making clear that the transferor remains owner of the property until his or her death.
One advantage to the transfer on death deed is that it avoids the probate process. With a transfer on death deed, the beneficiary does not have to go to court because they automatically own the property by operation of law once the transferor has died. Since the probate process can be both expensive and time consuming, a transfer on death deed provides transferors with an efficient way to avoid probate that allows for them to ensure their property smoothly passes to whom they want at their death. Another advantage to the transfer on death deed is that it would generally not be considered a gift for gift tax purposes. Furthermore, the Transfer on Death Deed Law provides a transfer on death deed revocation form making the transfer on death deed revocable at any time.
Overall, the Transfer on Death Deed Law set to take effect next month could provide residents of New York with a streamlined solution for transferring real property at death, and save their estates both time and money. However, clients should consult with their attorney before moving forward with a transfer on death deed as there may be other planning opportunities that are more appropriate given the facts and circumstances of any particular case.
The New York State Senate, Section 424 Transfer on Death Deed, Legislation, May 31, 2024,
