Is an Ohio Transfer-on-Death Affidavit Right for You?
August 5, 2014
An Ohio transfer-on-death affidavit (“TOD Affidavit”) is a way of designating death beneficiaries for your Ohio real estate, for the purpose of avoiding probate costs. The TOD Affidavit is similar in effect to a payable-on-death designation on a bank account or a beneficiary designation on a life insurance policy. Alternatives to the Ohio TOD Affidavit include survivorship deeds, life estate deeds, trusts, limited liability companies, and simple wills. Here is a breakdown of the positive and negative aspects of the Ohio TOD Affidavit:
Revocable/Amendable: A TOD Affidavit is revocable during your lifetime. This means that you can cancel the TOD Affidavit, or change the beneficiaries, at any time during your life.
No-Hassle Sales: You can sell the real estate without your beneficiaries’ consent. Your beneficiaries will not be entitled to any proceeds from the sale.
No Probate: Your real estate will transfer to your beneficiaries upon your death, without the time and cost of a probate estate.
Medicaid/Long-Term Care: In most instances, a TOD Affidavit will not interfere with your Medicaid application for long-term nursing care benefits. (Notably, however, upon your death, Medicaid Estate Recovery may have a priority interest in the real estate over the rights of your beneficiaries.)
Public Record: Your TOD Affidavit is an immediately-available public record. If privacy (during life or after death) is your main concern in estate planning, the TOD Affidavit may not be right for you.
Feuding Beneficiaries: After your death, a disruptive beneficiary (where there are multiple beneficiaries) may force a sheriff’s auction of the real estate under Ohio’s partition laws. All of your beneficiaries will share in the expenses of the sheriff’s auction, and all will lose the right to own and use the real estate.
Disinheriting the Grandkids: Only the named beneficiaries who are living upon your death will inherit the real estate. Short of addressing the contingent beneficiary problem described below, a deceased beneficiary’s children will receive nothing.
Naming Your Contingent Beneficiaries: You must list all of your beneficiaries by name on your TOD Affidavit. While you may list “contingent beneficiaries” who will stand in the place of a beneficiary who dies before you do, you may not use a generic term such as “per stirpes,” “children,” “heirs,” or “descendants.”
Kids Inheriting Real Estate: Naming minor beneficiaries may cause additional expenses upon your death – including guardianship proceedings under the Ohio Transfers to Minors Act, and if your beneficiaries wish to sell the property, internal requirements of an Ohio title company.