Ask the Probate Judge—Transfer of Death Deeds
Rudd, appeared February 27, 2003, Albuquerque Journal, Business Outlook
Reprinted with permission
Editor's note: This column may not be quoted or reproduced in whole or part without express written permission of the author.
Q: I just had my first case of a Transfer on Death Deed (TODD) not being recorded in time. Not only is there now a probate, but also the son, who would have received the house if the deed had been recorded, will receive just a one-third interest under the will. Please alert your readers about the importance of following all the requirements of the TODD law. P.T., Albuquerque, NM
A law allowing transfer on death deeds (TODD) took effect in June 2001. The TODD law only affects real property located in New Mexico. Examples of real property include houses, land, and ranches. The law allows a real property owner to create a TODD naming a beneficiary or beneficiaries to own that real property after the owner dies. The owner must sign the TODD in the presence of a notary public, who notarizes the owner's signature on the TODD.
The law requires that the TODD be recorded with the county clerk in the county where the real property is located. If the TODD is not properly recorded before the owner dies, the TODD is ineffective, as illustrated by the above question.
The beneficiary named in the TODD cannot control the property during the owner's lifetime. The owner is not required to deliver the TODD to the beneficiary, but telling the beneficiary where the deed is stored may prevent future problems. No matter what a will says, a properly recorded TODD determines who owns the real property after the owner's death.
A court probate to transfer the real property should be unnecessary. A probate for a decedent's other assets might be necessary, depending on how they are titled.
A TODD can be revoked by recording a new TODD or by recording a revocation of the TODD in the county clerk's office where the property is located. The TODD is also revoked if all of the interest in the real property is sold before the owner dies.
The TODD is not effective until the owner dies. At death the TODD beneficiary should record the owner's death certificate with the county clerk in the county where the real property is located. A title company insuring title for TODD property will require the owner's death certificate and probably some proof that all bills, taxes, and statutory allowances of the estate have been paid. This is because the TODD is not effective to the extent the property is needed to pay claims against the estate or to satisfy statutory allowances to surviving spouses and children.
TODDs must be drafted and recorded properly. Coordinating a TODD with an overall estate plan is also important. For these reasons, having an attorney draft the TODD is wise.
Requiring that TODDs be recorded during the owner's lifetime prevents fraudulent deeds from being "discovered" after someone dies. In the case above, however, failure to record the deed during the owner's lifetime means the son gets much less than the owner intended.
© 2003, Merri Rudd & Albuquerque Journal, All Rights Reserved