Eliza Theiss NYC-based boutique law firm Pardalis & Nohavicka brings the latest legal updates from the world of real estate. Pardalis & Nohavicka handles an eclectic array of matters, representing individuals and business owners in civil litigation, criminal cases and business transactions, currently litigating and representing clients throughout the United States and around the world.
The latest 2024 New York State Budget Bill includes a significant amendment that introduces the concept of Transfer on Death Deeds (TODD) in the state. This allows property owners to designate a beneficiary who will automatically inherit their real property upon the owner’s death without having to go through the probate process, which can be costly and burdensome.
Beneficiary Designation & Recording
First, there are specific forms for creating and revoking TODDs that must be accurately completed and recorded to be effective. Primarily, two witnesses and a Notary Public are required and the transferor must have the mental capacity to understand and execute the TODD. The TODD must also be recorded during the transferor’s lifetime in the county where the property is located.
Transferors can designate a primary as well as an alternate beneficiary. However, if the designated beneficiary dies before the transferor, the TODD does not extend to their heirs.
Revocability
Additionally, the TODD can be revoked at any time before the transferor’s death. This can be done by recording a revocation form; executing and recording a new TODD; or transferring the property through another deed that explicitly revokes the TODD. Divorce or any other dissolution of marriage also revokes the TODD. Notably though, a TODD cannot be revoked through a will.
Public Assistance Eligibility, Creditors and Taxes
The transferor also retains full control over the property until their death. As such, the transfer does not affect a creditor’s interest of the transferor, nor does it impact the transferor’s eligibility for public assistance. That said, if the transferor’s estate is insufficient to cover debts or statutory allowances, creditors can make claims against the property transferred via TODD within 18 months of the transferor’s death.
On par with revocable trusts, TODDs also don’t trigger the gift tax or affect the transferor’s cost basis in the property because the TODD does not benefit the beneficiary during the transferor’s lifetime. On a similar note, creditors of the designated beneficiary cannot make claim on the subject property during the transferor’s lifetime.
Simplified Estate Planning
Overall, this change simplifies a significant part of the estate planning process and provides certainty — especially for those whose only major asset is their primary residence. Even so, as always, consult with a legal professional before utilizing a TODD as part of an estate plan due to its complexities and potential legal implications.
About
John Pak serves as the Real Estate Chair at the Law Offices of Pardalis & Nohavicka. He is a transactional attorney specializing in acquisitions, dispositions and leasing. A graduate of Brooklyn Law School, he received his BA in Political Science from New York University. Prior to joining PN Lawyers, John owned his own private law practice for 15 years and a title company for 6 years.
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Taso Pardalis is a founding partner of the Law Offices of Pardalis & Nohavicka, a leading full- service NYC law firm with offices in Manhattan, Queens and WeWork. Taso may be a well-known attorney with many cases making headlines in major media outlets, but at heart, he is a true entrepreneur that believes in supporting the small business community. His areas of concentration are: Intellectual Property, Trademarks, Corporate, Business Law and Real Estate Law.
Disclaimer
This article is intended for educational and information purposes only and should not be construed as legal or investment advice.
