FROM THE DIRECTOR: OCTOBER 2023

Hello, My Name is: TOD – Getting to Know Transfer on Death Deeds

By Barbara Engstrom, Executive Director

I often think of Transfer on Death (TOD) deeds as a new estate planning tool in Washington, but they’ve actually been around for almost a decade.  That said, it seems like TOD deeds are still flying under the radar for a lot of attorneys.  In this column, I chat with Stephen Seely, Director of the Pierce County Law Library, about all things TOD.  When Stephen was the KCLL Outreach Services Attorney, he created an excellent self-help Transfer on Death deed packet.  The packet is available for purchase in the law library or via our website.

Stephen, can you explain what the Transfer on Death deed (TOD) is?

In 2014, the Legislature passed the statute that created the transfer on death deed (RCW 64.80). The Transfer on Death Deed is a type of time-delay deed that is recorded but doesn’t take effect until the person who currently owns the property dies. At that point the beneficiary listed on the deed can claim ownership of the property.

What are the basic statutory requirements of TOD deeds?

The basic requirements are laid out in RCW 64.80.060. There are three major requirements:

  • the deed must have the same essential elements and formalities as the more traditional deeds that we’re familiar with (those requirements are in RCW 64.04)
  • the deed must say that the transfer occurs at the transferor’s death
  • the deed must be recorded in the Recorder’s Office/Auditor’s Office of the county where the property is located.

Can married couples or joint owners use a single TOD deed to transfer property?

The law allows a married couple or joint owners to use a single TOD deed to transfer the property all in one go. However, it may not be the wisest course of action because it makes revoking the TOD deed more complicated. Attempting to revoke the TOD deed will require all the living transferors listed on the deed to revoke it. In short: if they jointly giveth, they must jointly taketh away.

How do you revoke a TOD deed?

RCW 64.80.080 covers how to revoke a TOD deed. There are three separate methods. The transferor(s) will need to:

  • record an “instrument” (a.k.a, a document) that expressly revokes the TOD deed, or
  • record another TOD deed that expressly revokes or is inconsistent with the first TOD deed, or
  • record another type of deed that expressly revokes the TOD deed

Which takes priority if a will’s provisions conflict with a TOD deed?

If there is conflict between a will and the TOD deed, the TOD deed wins. RCW 11.02.005(13) identifies a TOD deed as a nonprobate asset. That status as a nonprobate asset allows the ownership of the property to transfer automatically to the beneficiary listed on the TOD deed, outside of probate, and independently of the will.

How do the beneficiaries claim property that was transferred using a TOD?

The beneficiary automatically gets ownership when the transferor dies but there are a few steps they will need to complete to “perfect” their ownership. This is done by recording a certified copy of the transferor’s death certificate and a Real Estate Excise Tax Affidavit in the Recorder’s Office/Auditor’s Office in the county where the property is located. This satisfies the requirements of WAC 458-61A-202(6)(d) and WAC 458-61A-303(2)(m).

What are the downsides of using a TOD deed to transfer property?  Are there situations where TOD deeds should be avoided?

One of the big downsides is that no notice is required to be given to the beneficiary, so it’s possible to leave the beneficiary a property with a lot of issues and the beneficiary ends up with that lemon of property unless they know to disclaim the property and do it fairly quickly (usually within 9 months after the death). The disclaiming process is covered in RCW 64.80.110.

Another issue is that the beneficiary will become liable for any probate estate claims or surviving spouse/surviving child allowance claims. This is covered in RCW 64.80.120.

If real property was transferred using a TOD deed and the rest of the estate is under $100,000 can a small estate affidavit be used to avoid probate to settle the remainder of the estate?

As with all things in the law, it depends. If there is no other real property in the estate, then I’m inclined to say yes. However, there is always the possibility that a beneficiary disclaims the property, and the property would remain part of the transferor’s estate; this would make the estate ineligible for the small estate affidavit process.

Now that TOD deeds have been in effect for almost a decade in Washington, what, if any, issues are coming up in case law?

It’s been quiet on the case law front. Because the wait between the recording of the TOD deed and the transfer of the property can be a literal lifetime, it may take another decade or two for litigation-worthy issues to crop up.

Want to Learn More?

If you would like to learn more about Transfer on Death deeds or find out how to purchase Stephen’s wonderful TOD packet, visit the law library at www.kcll.org or contact us via services@kcll.org.

Thanks for helping us get to know TOD, Stephen!