Transfer on Death Deeds

By Gracie Davis – Deputy Executive Assistant at West Virginia Senior Legal Aid

So, you want to know what is going to happen to your things when you pass . . . Let me introduce you to my friend, TODD. No, TODD is not a person. Instead, it is a transfer on death deed (TODD).

A TODD is a legal document allowing a property owner to designate a beneficiary who will receive the property upon the owner’s death without probate (which can be a real pain). West Virginia has adopted the Uniform Real Property Transfer on Death Act, which governs the use of TODDs and provides a streamlined process for transferring real property upon death in the state.

To create a TODD, the grantor (i.e., property owner) must execute a deed that specifies the property and names the beneficiary. This deed must be signed, notarized, and recorded in the county where the property is located.

A TODD does not take effect until the grantor’s death. Until then, the grantor retains full ownership and control of the property, including the right to sell, mortgage, or otherwise manage the property. A TODD is effective without (1) notice or delivery to or acceptance by the designated beneficiary during the transferor’s life or (2) consideration. W.Va. Code §36-12-10.

One can change one’s mind as to whom the beneficiary will be at any time because a TODD does not create a present interest in the named beneficiaries, and there is no gift to the beneficiary at the time the deed is created. Since the grantor has not gifted anything to the beneficiary, there is a double benefit of not requiring gift taxes to be paid on the interest created. W.Va. Code §36-12-9.

Upon the grantor’s death, the property typically receives a step-up in basis to its fair market value at that time, which can benefit the beneficiary in terms of capital gains taxes. Furthermore, the property transferred through a transfer is still subject to the grantor’s debts and liabilities. Creditors may have claims against the property even after the grantor’s death.

The beneficiary has no rights to the property until the grantor’s death, and those potential rights can be revoked at any time until the grantor’s death. This can be done by creating a new TODD, executing a revocation document, or transferring the property to someone else during the grantor’s lifetime. A TODD is revocable even if the deed or another instrument (i.e., written legal document) contains a contrary provision. W.Va. Code §36-12-6.

An instrument is effective to revoke a recorded TODD (partially or fully) if the instrument is (1) A TODD that revokes the deed or part of the deed expressly or by inconsistency; (2) An instrument of revocation that expressly revokes the deed or part of the deed; or (3) A TODD can be overridden by a subsequent lifetime transfer of the same property. If the transferor makes an inter vivos deed (i.e., deed transferring property during their lifetime) for the same real estate described in the TODD, and this deed is acknowledged and recorded after the TODD, the inter vivos deed takes precedence. This applies even if the inter vivos deed does not explicitly revoke the TODD, as long as it is recorded before the transferor’s death in the county clerk's office where the property is located. If a TODD is made by more than one transferor, revocation by a transferor does not affect the deed as to the interest of another transferor; and a deed of joint owners is revoked only if all living joint owners revoke it. After a TODD is recorded, it may not be revoked by a revocatory act on the deed. W.Va. Code §36-12-11.

If a joint owner makes a TODD and is survived by other joint owners, the property goes to the surviving joint owners by right of survivorship. If the transferor is the last surviving joint owner, the TODD becomes effective. Any TODD properly recorded with the clear intent to designate a transfer on death beneficiary will be liberally construed to fulfill that intent. Similarly, any survivorship clause in a properly recorded deed that fails to create a right of survivorship tenancy but otherwise shows a clear intent to designate a beneficiary will be liberally construed to be an effective TODD. W.Va. Code §36-12-15. Additionally, if the beneficiary passes before the grantor does, the TODD becomes void unless an alternative beneficiary is named.

During the transferor's life, a TODD does not: (1) Affect the transferor's or any other owner's rights, including the right to transfer or encumber the property; (2) Impact the rights of a transferee, even if they know about the TODD; (3) Influence the rights of any creditor of the transferor, regardless of their awareness of the TODD; (4) Affect eligibility for public assistance for the transferor or the designated beneficiary; (5) Create any legal or equitable interest for the designated beneficiary; or (6) Subject the property to claims by the designated beneficiary's creditors. W.Va. Code §36-12-12. Furthermore, a TODD is nontestamentary (i.e., it is unrelated to a last will and testament). W.Va. Code §36-12-7.

For further aid, please contact a licensed attorney. West Virginia Senior Legal Aid is dedicated to defending West Virginia seniors’ rights.