Transfer on Death Deed in Minnesota: How It Works

A Transfer on Death Deed (TODD) is one of the simplest tools available to Minnesota property owners who want to pass real estate to their heirs without going through probate. Authorized under Minn. Stat. Section 507.071, the TODD allows an owner to name a beneficiary who will receive the property automatically upon the owner’s death — while the owner retains full control during their lifetime.

For many Minnesota families, a TODD offers a straightforward way to keep a home or other real property out of probate court. But it is not the right solution for every situation, and mistakes in execution can undermine the entire purpose.

What Is a Transfer on Death Deed?

A Transfer on Death Deed is a recorded deed that designates a beneficiary to receive real property when the current owner dies. Unlike a traditional deed, the TODD does not transfer any interest during the owner’s lifetime. The owner continues to own the property outright, can sell it, mortgage it, or change their mind at any time.

The transfer only takes effect at death. Until that moment, the named beneficiary has no legal interest in the property — no right to use it, no right to prevent a sale, and no claim against it.

This makes the TODD fundamentally different from a joint tenancy deed, where the co-owner has an immediate interest in the property. It is also different from placing property in a revocable living trust, which requires transferring title to the trust during the owner’s lifetime.

Requirements Under Minnesota Law

Minnesota’s TODD statute sets out specific requirements that must be followed precisely. Failure to comply with any of these can render the deed ineffective.

Execution Requirements

• The deed must contain language stating that the transfer occurs at the owner’s death
• The deed must be signed by the owner (the grantor)
• The signature must be acknowledged before a notary public — the same formality required for any deed
• The deed must be recorded with the county recorder in the county where the property is located before the owner dies

This last requirement catches many people off guard. A TODD sitting in a desk drawer is legally meaningless. Recording is not optional — it is what makes the deed effective.

Who Can Use a TODD

Any individual who owns real property in Minnesota can execute a TODD. This includes property held in sole ownership or as tenants in common. However, property already held in joint tenancy has a built-in survivorship mechanism, making a TODD unnecessary and potentially conflicting.

What Property Qualifies

A TODD can be used for any interest in real property located in Minnesota, including:

• Single-family homes and condominiums
• Vacant land
• Lake cabins and recreational property
• Commercial real estate
• A tenant-in-common interest in any of the above

A TODD cannot be used for personal property, bank accounts, vehicles, or any non-real-estate asset.

How to Revoke or Change a TODD

One of the TODD’s greatest advantages is its revocability. The owner can revoke a TODD at any time before death by:

1. Recording a revocation instrument with the county recorder
2. Recording a new TODD for the same property — the later deed supersedes the earlier one
3. Selling or conveying the property during the owner’s lifetime — a completed sale effectively eliminates the TODD because the owner no longer holds the interest

Simply destroying the original document does not revoke a recorded TODD. The revocation must also be recorded.

Advantages of a Transfer on Death Deed

Avoids Probate

The primary benefit is probate avoidance. When the owner dies, the beneficiary files a death certificate and an affidavit with the county recorder. No court proceeding is required to transfer title.

Owner Retains Full Control

Unlike a gift deed or a joint tenancy deed, the TODD does not give up any control during the owner’s lifetime. The owner can sell, refinance, or otherwise deal with the property freely.

Low Cost

A TODD is significantly less expensive to prepare and record than establishing a trust. For owners whose estate plan is otherwise simple, it can be an efficient solution.

No Gift Tax Consequences

Because no transfer occurs during the owner’s lifetime, executing a TODD does not trigger gift tax. The transfer at death is treated as a testamentary transfer.

Disadvantages and Limitations

Only Covers Real Property

A TODD addresses only the specific parcel of real property described in the deed. It does nothing for bank accounts, investments, personal property, or business interests. An owner who relies solely on a TODD may still need a comprehensive estate plan to address these other assets.

Subject to Claims of Creditors

Under Minn. Stat. Section 507.071, subd. 13, property transferred by a TODD remains subject to the claims of the deceased owner’s creditors, including costs of administration and allowances to the surviving spouse and children. The beneficiary receives the property subject to these potential claims.

Interaction with Mortgages and Liens

A TODD transfers property subject to any existing mortgage, lien, or encumbrance. The beneficiary receives the property as it stands — they do not receive it free of debt. If there is an outstanding mortgage, the beneficiary will need to refinance, assume the loan, or pay it off.

Multiple Owners Create Complications

When property is owned by more than one person, each owner can only execute a TODD for their own interest. This can lead to fractured ownership situations if not coordinated carefully.

Common Mistakes with Transfer on Death Deeds

Failing to Record the Deed

This is the most common and most consequential error. An unrecorded TODD has no legal effect. The property will pass through probate as if the TODD did not exist.

Using a TODD When a Trust Would Be More Appropriate

For owners with multiple properties, complex family situations, or estates that may owe Minnesota estate tax, a TODD alone is usually insufficient. A revocable living trust or irrevocable trust may provide significantly more flexibility and protection.

Not Updating After Life Changes

A TODD names a specific beneficiary. If that person predeceases the owner, the TODD may lapse, sending the property into probate anyway. Owners should review and update their TODDs after major life events — divorce, death of a beneficiary, or sale and purchase of new property.

Incorrect Property Description

The legal description on the TODD must match the property exactly. Errors in the legal description — even minor ones — can create title problems for the beneficiary.

How a TODD Fits into a Broader Estate Plan

A Transfer on Death Deed is a useful tool, but it is rarely a complete estate plan on its own. It addresses one asset — a specific piece of real property — and does nothing for the rest of the estate.

Most Minnesota residents benefit from combining a TODD with other planning instruments: a will to address remaining assets, powers of attorney for financial and healthcare decisions, and beneficiary designations on retirement accounts and life insurance. For families with more complex needs, a trust-based plan may accomplish everything a TODD does and much more.

An experienced estate planning attorney can evaluate whether a TODD is the right approach for a particular property and family situation, or whether a more comprehensive strategy would better serve the owner’s goals.