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How to Create a Transfer on Death Deed in Virginia

A Transfer on Death Deed (TODD) in Virginia offers a simple way to transfer property directly to a beneficiary, avoiding probate. At Commonwealth Life & Legacy Counsel, located in Central Virginia, we help clients leverage TODDs to create a seamless assignment of property in their estate plan.

What is a Transfer on Death Deed?

A Transfer on Death Deed is a simple legal tool that allows you to pass your real property—like a home or land—to a named beneficiary upon your death. Think of it as a beneficiary designation for your property, much like you might have on a life insurance policy.

Unlike a will, which usually requires probate (the court process of distributing a deceased person’s assets), a TODD lets property pass directly to the beneficiary, saving time and costs. Compared to setting up a trust, which can also avoid probate, a TODD is usually much simpler and cheaper to set up.

While TODDs are effective for straightforward property transfers, they aren’t ideal for every estate plan. Complex family situations, such as blended families or multiple heirs, often require additional planning tools to make sure everyone is provided for in the best way possible.

Requirements for a Valid TODD in Virginia

To ensure your Transfer on Death Deed holds up legally in Virginia, there are a few essential requirements to keep in mind:

Clear Legal Description

Your TODD needs a clear legal description of the property being transferred, identifying the grantor (you, the property owner) and the grantee (the person you’re leaving the property to). This description should be precise, as it’s crucial for recording purposes.

Explicit Statement of Transfer

The deed must state that the transfer only takes effect at the owner’s death. This clear wording is essential to avoid any misunderstandings about when the transfer occurs.

Recording with the Circuit Court

For a TODD to be effective, it must be recorded in the circuit court’s land records in the county where the property is located. This recording must happen during the owner’s lifetime, so it’s a good idea not to delay on this step.

Mental Capacity

You need to have the mental capacity to make a will, meaning you understand what property you own and who you wish to leave it to.

Joint Ownership

If you co-own the property with someone else, all joint owners need to sign the TODD for it to be valid. This often comes into play with married couples or family members who jointly own property.

Creating Your Transfer on Death Deed

Suppose you’ve decided to create a TODD. In that case, there’s an optional form in the Virginia Code (Section 64.2-635), but having an attorney’s guidance can be invaluable, especially if your situation is unique or you’re concerned about potential future challenges to the deed. Here’s what you’ll need to include:

  • Date of the Deed: Make sure the date is clearly noted.
  • Full Name and Address of the Transferor: Your full legal name and address.
  • Legal Description of the Property: This should match the description on your existing deed, including the official boundaries.
  • Primary Beneficiary’s Name: The individual who will inherit the property upon your passing.
  • Alternate Beneficiary (Optional): Consider naming a backup beneficiary in case your primary choice passes away before you.
  • Revocation Statement: One of the unique aspects of a TODD is that it can be revoked or changed at any time before your death. Including a statement about this right can be helpful if you’re unsure about finalizing your decision right away.

Signing and Notarizing Your TODD

To make your TODD official, you’ll need to sign it in front of a notary public. The notary will then acknowledge your signature, which is a key step in the process. Skipping this part would invalidate the deed, so it’s essential not to overlook it.

Recording the Deed

Once you’ve completed and signed your TODD, the next step is recording it in the circuit court’s land records in the locality where the property is located. If your property is in Albemarle County, for instance, you’ll need to visit the Albemarle County Clerk of the Circuit Court’s office.

A TODD only becomes valid if it’s recorded before the property owner’s death, and skipping this step would make the deed ineffective. Fortunately, TODDs are exempt from recordation taxes under Virginia’s tax code (Section 58.1-811(J)), which can help keep the cost down.

Benefits of a Transfer on Death Deed

There are several advantages to using a TODD for your Virginia property:

  • Avoids Probate: Your loved ones won’t have to go through probate to inherit the property, saving time and potentially substantial legal costs.
  • Control Over the Property: As the property owner, you keep full control. You can sell, mortgage, or even revoke the TODD whenever you want.
  • Simple Process: Setting up a TODD is much simpler than establishing a trust and usually costs less.
  • Cost-Effective: For many families, a TODD is a budget-friendly way to make sure property is passed on as intended.
  • Revocability: TODDs can be revoked. It’s an important feature that provides flexibility.
  • Creditor Protection: TODDs do not subject the property to claims of a creditor of the beneficiary during the transferor’s lifetime.

Considerations and Drawbacks

While TODDs offer many benefits, they’re not always the best solution for everyone. Here are a few factors to think about:

  • Not Ideal for Complex Estates: If you have multiple heirs or significant assets, a TODD may not provide enough flexibility.
  • Potential for Beneficiary Disputes: Sometimes, heirs may challenge the validity of a TODD, particularly if they feel excluded or overlooked.
  • Medicaid Eligibility: If you’re planning for long-term care, you’ll want to consider how a TODD might impact Medicaid eligibility.
  • Creditor Claims: A TODD doesn’t shield property from your creditors, so if you have debts, they could affect what’s passed on to your beneficiaries.
  • Effect on Property Rights: TODDs do not affect the transferor’s right to claim the property as a homestead or any property tax exemption.

Secure Your Legacy Today with Commonwealth Life & Legacy Counsel

If you’re considering a Transfer on Death Deed for your Virginia property or simply have questions about estate planning, we invite you to reach out. Our firm proudly serves clients across Central Virginia, including Charlottesville, and Powhatan. With our experienced, compassionate team, we’re here to help you feel confident that your estate plan reflects your wishes.

Ready to take the next step? Contact us at Commonwealth Life & Legacy Counsel for a consultation. You can reach us in Central Virginia at (434) 589-2958 or in Powhatan at (804) 598-1348. Let’s work together to secure your legacy and protect your loved ones for years to come.