New Ohio Statutes Create "Transfer on Death" Deed

     Effective August 29, 2000, Ohio Attorneys and their Title Companies will make available to their clients a new type of Deed. Already coined with an acronym as T.O.D. or Transfer on Death, this deed instrument will assist in simplifying the transfer of real property upon death and could become a useful tool for estate planning.

     Recently passed House Bill 313, as signed into law by Governor Robert Taft, creates two statutes, Sections 5302.22 and 5302.23 of the Ohio Revised Code, that allow the "Transfer on Death" designation on deeds of real property. These sections allow any fee simple owner to real property to create an interest in a beneficiary or several beneficiaries that would become effective upon the death of the owner. The designated beneficiary or beneficiaries do not have a present interest in the real property, and the owner may change or eliminate the designated beneficiary at any time. Any designation, however, would be subject to the right of dower by the owner's spouse, if any.

     Upon the death of the owner, the real property would pass to the designated beneficiaries name who are living at that time. In addition, the owner may name a contingent beneficiary to take title to the real property in the event that the primary beneficiary would pre-decease the owner. In the event that all designated beneficiaries (primary and contingent) do not survive the owner, then the real property would pass according to the Last Will and T Testament of the owner or , if a will does not exist, according to the Statutes of Decent and Distribution.

     Any liens, including mortgages or encumbrances on the property would most definitely remain with the real estate until they were paid in full. Therefore, a beneficiary of a "T.O.D." deed would take title subject to the liens of record, and the rights of lien holders would not be affected.

     "T.O.D." designations would only be available owners of a fee simple interest in the real property. It would not be applicable to owners of life estates, leasehold interests or equitable land-contract interests in real property.

     A "T.O.D." beneficiary of real property does not necessarily have to receive a copy of the Deed, and the designation does not need to be supported by valuable consideration. Further, a "T.O.D." designation does not exempt the value of the real estate from inclusion in the deceased owner's estate for Estate Tax purposes. Though these statutes regarding "T.O.D." designations sound complex, it is intended to simplify the current procedure of probating real property in Ohio. Be certain to consult your tax advisor, your estate planner, and your attorney before executing this new type of conveyance instrument.

Taken from the Dayton Daily News' Real Estate Plus section, Sunday, August 13, 2000. Authored by Christina Cartwright, under advisement of John Ruffolo, attorney and corporate counsel for Landmark Title South, and Michael Wypasek, Ohio Agency Counsel.