North Carolina Law Review

University of North Carolina School of Law

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Chapel Hill, NC 27514

Transfer on Death Deeds: Benefit or Burden? A Proposal for Transfer on Death Deed Legislation in North Carolina

March 29, 2012

90 N.C. L. Rev. Addendum 106 (2012)

 

Real property is a unique concept upon which ideas of property ownership and testator rights have been added to form a multifaceted spectrum of law. An individual's right to own and devise real property is rooted in common law principles and secured by expectations of testamentary freedom. In an effort to protect these rights, owners execute wills and trusts to maintain control of the distribution of their property after death. Once a will has been validated, probate ensures that justice is served by overseeing title transfers, creditor payments, and the distribution of property to beneficiaries. For better or worse, probate has historically been a fixture in property law. But the idea of subjecting one's relatives and friends to the probate process has prompted some property owners to choose nonprobate methods oftransferring real property.

 

Contrary to popular belief, wills are not the most common method of transferring property. Recent developments in property law have allowed owners to bypass the use of wills more easily, opening the door for nonprobate property transfer to avoid the arduous and expensive probate process. One of these methods is the transfer on death deed ("TOD deed") or beneficiary deed. Since Missouri first adopted TOD deeds in 1989, they have gained popularity. TOD deeds allow an owner to record a deed that transfers ownership to a beneficiary or beneficiaries upon the owner's death. After Missouri, no state adopted a TOD deed statute until 1997. Now, seventeen states have passed a TOD deed statute with four of these statutes being passed in 2011 alone. Other states have or are considering TOD deed bills. For example, in January 2011, the Nebraska legislature introduced a bill to enact the Uniform Real Property Transfer on Death Act and is still considering it at the time ofthis writing. The extent of these recent enactments and introductions of TOD deed legislation makes it clear that support for TOD deeds is gaining momentum across the country and that North Carolina should follow suit.

 

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