When one dies with assets in their name alone at death, those assets pass according to the terms of their Last Will and Testament (if they have one) or NY’s laws of intestacy (if they do not). Either way, a proceeding must be initiated in the Surrogate’s Court in order for the assets to be distributed. Given the expense, time, and complications that go hand-in-hand with probate or estate administration, a common goal is to stay out of the court system by ensuring that all of one’s assets, including real property (RP), are “non-probate.” It is with this in mind that the Heirs Property Protection & Deed Theft Prevention Act of 2024 authorized the creation of the Transfer On Death Deed (TODD). A TODD allows for the transfer of RP without the need for probate and, at the outset, is less expensive than hiring an attorney to prepare a trust into which you could transfer your RP—but is a TODD truly the best option?

A key problem with the TODD is its revocability. The owner/transferor (O/T) of the RP designates beneficiaries of the TODD to receive the RP upon the O/T’s death, however, during the O/T’s lifetime this transfer can be revoked. As a result, even if the O/T seeks to transfer ownership using a TODD, from both a Medicaid and estate tax perspective, no transfer has occurred. Rather, the O/T retains full ownership of the RP, such that it remains fully accessible to creditors of the O/T.