A Transfer on Death Instrument (TODI) is a legal document that allows property owners to assign a beneficiary to inherit their property upon death. Unlike a will, a TODI does not need to go through probate. The TODI becomes effective only after the property owner’s death.
Key benefits of a TODI
Many people prefer using a TODI to transfer simple real property upon death rather than relying on a will or a trust for several reasons:
- Avoiding probate: A primary reason people choose to use a TODI rather than write up a will is to avoid probate. TODIs do not have to go through probate and are effective immediately upon the owner’s death.
- Flexibility and control: Unlike irrevocable trusts, the property owner maintains control of the property while alive and can revoke the TODI at any time.
- Simplicity: A TODI is easy to create and less expensive than setting up a trust.
The efficiency and cost-effectiveness of a TODI make it popular among people who only want to transfer real estate property upon their death.
Limitations
TODIs do have some limitations. Unlike wills and trusts, TODIs only apply to real estate properties and have a limited scope. Creditors can still lay a claim on the property. Other people can also contest them, leading to a legal battle that the grantor or the property owner might not want to happen to their heirs.
Weighing the pros and cons
Many variables depend on whether you need a TODI, a will or a trust. Estate planning can be a complex issue. Consulting with a legal counsel to explore your options may be advisable.
