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February 15th, 2024
A transfer on death (TOD) deed is a legal document that allows a property owner to designate a specific person or entity as the beneficiary who will automatically inherit the property upon the owner's death, without the need for probate. The deed conveys the property to the designated beneficiary, subject to any outstanding mortgages or liens, when the property owner passes away.
Here are some key points to understand about TOD deeds:
- Avoiding Probate: One of the primary advantages of a TOD deed is that it allows for the transfer of real property outside of the probate process. This can save time and money and keep the transfer of property private.
- Revocable: A TOD deed is revocable during the property owner's lifetime. This means the property owner can change or cancel the designation of the beneficiary at any time.
- Multiple Beneficiaries: Maine allows for multiple beneficiaries to be named with specific percentages of ownership. This can be helpful if you want to distribute the property among several individuals or entities. The deed can also include contingent beneficiaries in the event the primary beneficiary is not living at the time the owner dies.
- Retain Control: The beneficiary only gains ownership of the property when the owner dies. The owner retains full control and ownership of the property during their lifetime.
- Mortgages and Liens: It is important to know that any existing mortgages or liens on the property remain in effect, and the beneficiary will inherit the property subject to these encumbrances.
TOD deeds must comply with Maine law. There are often title insurance and property insurance considerations. Additionally, the property owner should carefully consider the implications of designating a beneficiary and make sure the chosen beneficiary is aware of their potential inheritance. For these reasons, it is important to consult an attorney or real estate professional before preparing or signing a TOD deed.