What Is a Transfer-On-Death Deed in Georgia?
Effective on July 1, 2024, Georgia law recognizes a special type of real property deed that may be used to transfer property on the owner’s death. The deed is called a transfer-on-death deed, or TOD deed. While the new law adds an option for addressing property distribution of an estate, using a TOD deed is not the most suitable option for every estate plan, and there can be significant drawbacks. Before you create a TOD deed, it is essential to talk with a Georgia estate planning attorney to fully understand the implications and requirements of the law and ensure that you choose the most effective estate planning tools and options for accomplishing your unique goals.
What Is a Transfer-On-Death Deed?
A TOD deed is a special form of real property deed, in which the current owner of a property designates one or more beneficiaries to become the owner of the property on the death of the current owner. The deed must meet specific requirements established by the law in order to be legally effective. In Georgia, a specific law, found at O.C.G.A. § 44-17-1 through § 44-17-7, defines a transfer-on-death deed, sets certain requirements for creating a TOD deed, establishes how transfer-on-death deeds work, and sets requirements for a beneficiary to receive property through a TOD deed.
When real estate is subject to a transfer-on-death deed, there is no actual transfer of any interest in the property during the current record owner’s lifetime. The owner continues to hold full ownership and all rights to the property during their lifetime. The beneficiary designation is not permanent, and can be changed or revoked by the record owner at any time, by following specific requirements in the law. It is important to note that provisions in a will cannot revoke or change a beneficiary designation in a TOD deed.
Under the law, a designated beneficiary must take specific steps within a limited time after the owner’s death to accept and take ownership of the property. If those steps are not taken, the property reverts to the deceased owner’s estate. If a designated beneficiary does properly complete the process, the property transfers to the beneficiary without going through the probate process. A beneficiary who receives property under a TOD deed receives an ownership interest subject to all recorded encumbrances (such as liens and mortgages) and — in some cases — subject to unrecorded encumbrances or claims.
Transfer-on-death deeds are not the same as TOD designations for other types of accounts, such as bank accounts and security accounts. In Georgia, TOD deeds are governed by the specific statute referenced above, which does not apply to other types of TOD designations.
Drawbacks of TOD Deeds
While a transfer-on-death deed is a new option for Georgia residents to consider in planning distribution of their estate, using a TOD deed can have significant drawbacks. In some situations, there are better options and tools to accomplish specific estate planning goals.
For example, if a current record owner creates a TOD deed, there is no asset protection for the property during the life of the owner. If the property owner needs nursing home care or faces some other type of liability, they may not own the property free and clear at the time of their death.
A TOD deed is also not a good option when the current owner’s goals include ensuring that their children, grandchildren, or other specific individuals ultimately own and benefit from the property. When property subject to a TOD deed transfers to a beneficiary after the owner’s death, the beneficiary is free to do anything with the property they wish. The original owner has no control over the ultimate use or disposition of property transferred by a TOD deed. This situation sometimes arises when spouses execute TOD deeds, which enables a surviving spouse to transfer the property to a new spouse and the new spouse’s children, rather than to the natural children of the original spouse.
Fortunately, there are other estate planning options that can effectively address distribution goals that a TOD deed does not. Wills and trusts are valuable estate planning tools that address many important estate planning goals. Trusts are an especially important option for protecting your legacy for future generations. A complete, sound estate plan also contains other documents that provide protection during your life and after death. Finally, if avoiding probate is one of your estate planning goals, there are options that may be more suitable for your circumstances than a TOD deed.
In other words, if you wish to consider using a TOD deed to transfer property on your death, it is extremely important to talk with an estate planning attorney before you take any steps toward creating a transfer-on-death deed. A TOD deed is just one of several options and tools for transferring property after death, and it is not the most suitable option for many individual circumstances.
Talk With an Experienced Georgia Estate Planning Attorney
Our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia focuses on helping clients determine their estate planning goals and using the best approach to address all their concerns relating to their well-being, assets, families, and estates. We serve clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County, and Paulding County. To schedule a consultation, call us at (770) 382-0984 or contact us through our online form.