Ohio law allows individuals to designate a Transfer-On-Death (“TOD”) beneficiary for real estate. This is accomplished by filing a TOD Designation Affidavit with the applicable County Recorder.
To be effective, the Affidavit must comply with the requirements of Ohio Revised Code Section 2302.22 and be recorded prior to the death of the owner. If the Affidavit is recorded after the owner’s death, it is not effective.
The interest of a deceased owner is transferred to the TOD beneficiaries who are identified in the TOD Designation Affidavit by name, and who survive the deceased owner. The owner is also able to designate one or more persons as contingent TOD beneficiaries, who would take the same interest that would have passed to the TOD beneficiary had the TOD beneficiary survived the deceased owner.
If there is a designation of more than one TOD beneficiary, the beneficiaries take title to the interest in equal shares as tenants in common, unless the deceased owner has specifically designated other than equal shares or has designated that the beneficiaries take title with rights of survivorship. If there are two or more TOD beneficiaries and the deceased owner has designated that title to the interest in the real property be taken by those beneficiaries with rights of survivorship, and one of the beneficiaries predeceases the owner, the surviving TOD beneficiary would take title to the deceased owner’s entire interest in the real estate.
The designation of multiple beneficiaries can present challenges. One challenge is if there are multiple beneficiaries designated as tenants in common owners and a beneficiary predeceases the owner, the deceased beneficiary’s TOD interest in the real estate passes to the surviving TOD beneficiaries, and not to the deceased beneficiary’s lineal descendants. Further, all of the tenants in common owners (and their spouses) would have to agree in connection with a mortgage or sale of the property. To address these types of issues, the client may elect to create a trust, the Trustee of which would be designated as the TOD beneficiary.
If none of the designated TOD beneficiaries survive the deceased owner, and there are no contingent TOD beneficiaries designated, or who have predeceased the owner, the deceased owner’s interest in the real estate would be included in the deceased owner’s probate estate, and would be distributed pursuant to the decedent’s Last Will and Testament or the laws of intestacy.
For assistance with all of your estate planning and probate administration needs, contact Isaac T. Heintz (513.943.6654) or Tammy Wilson (513.943.6663). Read more about our Estate Planning practice here.