Introduction

In April 2024, Minnesota enacted significant updates to its transfer on death deed (TODD) law. These changes aim to simplify property transfers, avoid probate, and provide clarity for homeowners and beneficiaries. This law became effective on August 1, 2024.

Let’s take a look at the key points of this new legislation.

What Is a Transfer on Death Deed?

A TODD allows homeowners to designate beneficiaries who will automatically inherit the property upon the homeowner’s death. Similar to a “payable on death” designation for bank accounts, a TODD can streamline the transfer process and bypasses probate.

Key Changes in the Law

1. Title Clarity Before Owner’s Death:
   • Executing a TODD before the owner’s death does not affect the property title. However, an insurable interest exists in favor of the designated beneficiary.
   • If the beneficiaries are joint tenants, and no successor is listed as to a deceased beneficiary, the other surviving beneficiaries are the successors.
2. Validity and Revocation for Registered Properties:
   • TODDs can now be valid or revoked even if the deed or revocation was recorded incorrectly or incompletely for registered properties.
   • If the property is registered properly, the TODD is effective even if it was recorded incorrectly or incompletely in the county recorder’s office or the registrar of titles before the death of the owner.
3. Probate Court Jurisdiction:
   • Cases related to TODDs fall under probate court jurisdiction. This includes matters like medical assistance liens or the death of a beneficiary.
4. Descendants and Successor Beneficiaries:
   • A descendant of the beneficiary steps in only when no successor beneficiary is named in the TODD.
   • Court orders following probate law are necessary when a beneficiary cannot take possession of the property.
5. Property Insurance for Grantee Beneficiaries:
   • Insurance companies must allow extended coverage for the transfer after the homeowner’s death, but only if proper notice is provided in compliance with the law.
   • Beneficiaries are covered until they obtain insurance or for 30 days, whichever comes earlier, so long as proper notice was given.
   • A new warning in TODDs informs beneficiaries about property insurance issues.

Conclusion

Minnesota’s updated TODD law does make some improvements regarding property transfers and a smoother transition for property owners and beneficiaries.

However, it is absolutely critical that anyone with a TODD – whether created years ago or any time in the future – immediately puts their insurance company on notice of the existence of the transfer on death deed. The notice must include the names and contact information for all grantee beneficiaries. Failure to take this step will result in the property insurance terminating immediately at the death of the owner. If you have not notified your insurance company, we strongly encourage you to do so now.

Remember, estate planning is essential, and transfer on death deeds are just one tool to secure your property’s future.

To learn more, about estate planning, keep an eye on our Events page located at: https://www.wagnerlegalmn.com/events/.

If you’re ready to start being proactive about your estate plan, contact us to get started.

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