A transfer on death deed is a recorded document that names someone to inherit a specific piece of real estate when you die, bypassing probate while leaving you in full control of the property during your lifetime. You can sell, refinance, or change your mind at any point, and the beneficiary gets nothing until you die. Roughly 30 states and the District of Columbia recognize these deeds, so whether this tool is available to you depends on where the property sits.
How It Works While You’re Alive and After You Die
The deed covers real estate only. Not bank accounts, not vehicles, not personal belongings. While you’re alive, the person you named has no legal interest in the property. You can sell it, mortgage it, rent it, or leave it empty without their permission or knowledge. Their creditors cannot touch the property either, because the beneficiary does not yet own anything.
At the moment of your death, ownership passes directly to the named beneficiary by operation of law. Probate court is not involved. To clean up the public record, the beneficiary typically records a certified copy of your death certificate and any affidavit the county requires. The transfer itself is automatic; the paperwork matters later, when the new owner wants to sell, refinance, or insure the property.
States That Allow Transfer on Death Deeds
Not every state recognizes these deeds. Roughly 30 to 34 states plus the District of Columbia permit some form of transfer on death deed, with exact counts varying because a few states use slightly different mechanisms that reach the same result. If your state does not authorize them, a revocable living trust or another probate-avoidance tool may accomplish the same thing.
Each state sets its own form requirements, recording rules, and interactions with other estate planning documents. A deed that is valid in one state will not necessarily satisfy another state’s requirements. You follow the law of the state where the property is located, not the state where you live.
How to Create One
The mechanics are simple. The details are not forgiving. A mistake in the property description or a missed recording step can leave your beneficiary with nothing but a probate case.
What Goes in the Deed
Copy the full legal description of the property from your current deed. A street address is not enough. Include your full legal name as the current owner and the full legal name of each beneficiary. Name beneficiaries individually rather than by relationship: “my daughter Jane Smith,” not “my children.” If you name more than one beneficiary, specify how they will hold title and in what shares.
Many states publish a statutory form. Using that form is the safest route, because it already contains the specific language the state requires. The deed must state clearly that the transfer takes effect only at your death and that it is revocable during your lifetime.
Signing and Recording
You sign the deed in front of a notary. Some states also require witnesses. The beneficiary does not sign, consent, or even need to know. That is a real difference from an ordinary deed.
Then record it with the county recorder’s office where the property is located, and do it before you die. A transfer on death deed sitting unrecorded in a desk drawer when you die is worthless. Recording fees vary by county.
Changing or Revoking the Deed
You can change your mind. These deeds stay fully revocable during your lifetime, and the beneficiary’s permission is not needed.
Two approaches work:
- Record a revocation document. Most states have a specific revocation form. Sign it, notarize it, and record it in the same county recorder’s office. Until the revocation is recorded, the original deed still controls.
- Record a new transfer on death deed. A new deed naming different beneficiaries replaces the earlier one, as long as it explicitly revokes any prior transfer on death deed for the same property.
Selling the property also revokes the deed, because you no longer have anything to transfer. Tearing up your copy does nothing. The revocation, like the deed itself, has to be recorded to count.
When a Beneficiary Dies Before You Do
If a named beneficiary dies before you, their interest lapses. It does not pass to their own heirs. If you named several beneficiaries to share the property, the deceased beneficiary’s share generally shifts proportionally to the survivors in states that follow the Uniform Act’s approach. If every named beneficiary dies before you and you have not updated the deed, the property falls back into your estate and goes through probate. Naming alternates avoids that outcome.
Co-Owned Property
How the deed interacts with co-ownership depends on how title is held. If you and your spouse own as joint tenants with right of survivorship, the surviving spouse inherits first through the joint tenancy. The transfer on death deed activates only after the last surviving joint tenant dies. One joint tenant cannot use a transfer on death deed to defeat the other joint tenant’s survivorship rights.
If you own as tenants in common, each owner generally controls their own share, and a tenant in common can typically record a transfer on death deed for just their percentage without the other owners’ consent. How that plays out varies by state, and it can leave the beneficiary in a complicated co-ownership arrangement, so it is worth thinking through.
Taxes
Nothing taxable happens while you are alive. Because the deed is revocable and no transfer occurs until death, signing and recording it is not a taxable gift. The tax questions arrive after you die.
Stepped-Up Basis
Beneficiaries who inherit property through a transfer on death deed receive a stepped-up basis equal to the property’s fair market value at the date of death. Property acquired from a decedent takes a basis equal to that fair market value rather than the original purchase price.1Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent If you bought a house for $150,000 and it is worth $450,000 when you die, your beneficiary’s taxable gain on a later sale starts from $450,000. That erases $300,000 of potential capital gain.
Federal Estate Tax
The deed does not remove the property from your taxable estate. Its value at your death is included in your gross estate for federal estate tax purposes.2Office of the Law Revision Counsel. 26 U.S. Code 2031 – Definition of Gross Estate For 2026, the federal estate tax exemption is $15,000,000, so the tax only applies to estates above that threshold.3Internal Revenue Service. Whats New — Estate and Gift Tax Most families will not owe federal estate tax, but the property’s value still counts toward the total.
Property Tax Reassessment
Some jurisdictions reassess property for property tax purposes when ownership changes, which can raise the beneficiary’s annual bill. Whether a transfer on death deed triggers reassessment depends entirely on local law. Check before assuming the deed costs your beneficiary nothing.
Debts, Liens, and Medicaid Recovery
The deed transfers the property, but it does not clean it. The beneficiary takes title subject to every mortgage, lien, judgment, and encumbrance that existed at your death. A $200,000 mortgage stays attached to the property.
Creditor claims survive too. The Uniform Act and most state statutes make clear that a transfer on death deed does not shield property from the owner’s creditors. If you die with unpaid debts, creditors may still reach the transferred property, and the beneficiary can be personally liable up to the value of what they received, depending on state law.
Medicaid recovery catches many families off guard. If you received Medicaid-funded long-term care, your state may pursue estate recovery against the property even though it passed outside probate. States have authority to recover from non-probate transfers, and most exercise it. Treating a transfer on death deed as Medicaid planning can leave your beneficiary facing a claim for the full cost of your care.
Transfer on Death Deed Compared With a Revocable Living Trust
Both avoid probate. They solve different problems. A transfer on death deed covers a single piece of real estate and costs almost nothing to set up. A revocable living trust can hold any asset you own and gives you broader planning options.
The differences that usually drive the choice:
- Scope. A transfer on death deed works for real property only. A trust can hold bank accounts, investments, business interests, and personal property along with real estate.
- Incapacity. If you become mentally incapacitated, a transfer on death deed does nothing, because it only activates at death. A trust can name a successor trustee who steps in to manage assets while you are alive.
- Cost. A transfer on death deed costs little more than a recording fee. A trust involves attorney fees that typically run from several hundred to several thousand dollars.
- Multiple properties. Real estate in several states means a separate deed in each state that allows them. A single trust can hold property in multiple states.
- Conflict. If you put a property in a trust and then record a transfer on death deed for the same property, the deed generally overrides the trust for that asset.
For someone with one home who wants a simple, inexpensive way to keep it out of probate, a transfer on death deed is hard to beat. For anyone with more complex finances, multiple properties, or concerns about future incapacity, a living trust is the more complete tool.
Where These Deeds Fall Short
A transfer on death deed is elegant because it is narrow. That narrowness has limits. It does not help if your state does not authorize it. It does not protect the property from your creditors or Medicaid recovery. It gives no one authority to manage the property if you are alive but incapacitated. And it does not automatically coordinate with the rest of your estate plan.
The most common mistake is treating the deed as a complete estate plan. It handles one asset at one event. Your other property, your debts, guardianship of any minor children, and what happens if you cannot make decisions all need separate planning. A transfer on death deed does its job best as one piece of a larger strategy.