In Ohio, real estate may be transferred outside of probate through the use of a transfer on death designation affidavit.  This document is an affidavit that the owner of real estate signs and has recorded with the office of the county recorder in the county in which the real estate is located.  It allows the real estate to be transferred directly to a beneficiary upon the owner’s death.

The main advantage is that use of a transfer on death designation affidavit avoids having the property pass through the probate process.  Upon the owner’s death, the property passes by operation of law directly to the beneficiary.  This is similar to how property passes at death through a survivorship deed, in that when one of the owners of a property held as tenants with rights of survivorship dies, the property then belongs solely to the surviving owner.

However, the transfer on death designation affidavit is different from a survivorship deed because the beneficiary has no ownership interest in the property until the original owner has died.  As an example, if a property owner wanted her home to pass to her daughter upon her death, outside of the probate process, she could execute a survivorship deed, adding her daughter’s name to the deed.  But as soon as that deed is signed, the daughter has an ownership interest in the property. 

This means that in order to sell the property, the daughter (and the daughter’s spouse, if she is married) must agree to the sale and sign the deed.  If the daughter and her spouse refuse, the mother would have to file a partition lawsuit to get the court to order the property sold.  In addition, should the daughter run into issues with creditors, one of the daughter’s creditors could file a lien against the property.  If the daughter should ever file for bankruptcy, the bankruptcy trustee would look to the property as an asset.

The transfer on death designation affidavit solves these issues.  The property remains solely in the mother’s name during her lifetime.  The daughter, the daughter’s spouse, and the daughter’s creditors have no interest in the property.  The mother can sell the property at any time, without having to obtain the signature of her daughter.  The mother can also change the beneficiary at any time, without notification.

The transfer on death designation affidavit is flexible in that the property owner can designate more than one beneficiary.  The property owner can also name a beneficiary and a contingent beneficiary.  A transfer on death affidavit can also be executed if the property is already titled with a survivorship deed.  The property would then pass to the beneficiary named in the affidavit on the death of the last of the survivorship tenants to die.

A transfer on death affidavit can be a very useful estate planning tool, but it is not the solution to every situation, especially when there are multiple beneficiaries.  Sometimes, a survivorship deed or a trust is a better alternative.  An estate planning attorney at Maguire Legal Group can discuss your situation and needs and advise you on the pros and cons of all your options.