Transfer on Death Deeds in Minnesota. What Happens to the House?

Did your loved one leave you their house with a Transfer on Death Deed?

If so, that's good news! It usually means the house can skip probate, which can save a lot of time and money. But there are still a few steps you need to take before you really own the house, and a few things that catch people off guard.

Here's how Transfer on Death Deeds (TODDs) work here in Minnesota.

What is a Transfer on Death Deed?

A Transfer on Death Deed lets a homeowner name who gets their house when they pass away, without the house having to go through probate.

Minnesota has allowed them since 2008, and they've gotten really popular. A lot of people use them instead of putting their house in a trust, because they're simple and cheap.

A few things to know about how they work:

• The owner keeps full control while they're alive. They can live there, sell the house, or change their mind. The beneficiary doesn't own anything until the owner passes away.
• It has to be recorded before the owner dies. The TODD has to be filed with the county where the house is before the owner passes. A TODD sitting in a drawer that was never recorded doesn't do anything.
• It can be changed or revoked. The owner can record a new one or revoke the old one at any time.
• It can name more than one person, like all the kids.

How do I find out if there's a TODD?

Check with the county recorder's office (or registrar of titles) in the county where the house is. If a TODD was recorded, it'll be in the property records. Your loved one's attorney may also know, or you might find a copy with their important papers.

Okay, there's a TODD. What do I do now?

The house doesn't automatically show up in your name. You have to finish the transfer by recording a few documents with the county. Generally that means:

1. A certified copy of the death certificate.
2. An affidavit of identity and survivorship. This is a sworn statement that you're the person named in the TODD and that the owner has passed away. It also tells the county where to send future property tax statements.
3. A Medical Assistance clearance certificate. This is the one people don't expect. Before the transfer is complete, the county checks whether the state has a claim against the house for Medical Assistance (Minnesota's Medicaid) that your loved one received. You apply to the county for the certificate, and it says whether there is or isn't a claim.

Once those are recorded, the house is in your name (or in all the beneficiaries' names together).

Wait, the state might have a claim on the house?

Yes, it's possible. If your loved one was on Medical Assistance, especially for nursing home care, the state can try to recover what it paid from their estate, and a house passed by a TODD can still be part of that. If there's a claim, it has to be dealt with before you can sell the house with clear title.

The TODD also doesn't make debts disappear. If there's a mortgage on the house, it comes with the house. You'll need to keep paying it or pay it off when you sell. And if the estate can't pay its other bills, the house can sometimes still be on the hook.

This is a good one to run past a probate attorney if there's any chance it applies to you.

What if there's more than one beneficiary?

If the TODD names more than one person, like three siblings, then all three of you own the house together once the transfer is recorded. That means everyone has to agree, and sign, to sell it.

If one of you wants to keep it and the others want to sell, you'll need to work it out. (We wrote a whole post about what to do when siblings can't agree.)

What if a beneficiary passed away first?

This happens more than you'd think. If the TODD named a backup beneficiary, it usually goes to them. If not, and the person who passed away was family (like a son or daughter), Minnesota law generally passes their share to their own kids. If nobody named in the TODD is still living, the TODD may not work at all, and the house goes through probate instead. This one gets tricky, so have an attorney look at it.

Selling a house you got through a TODD

Here's the nice part. Since there's usually no probate, once the documents are recorded and any Medical Assistance claim is cleared up, you can usually sell the house a lot sooner than if it had to go through probate.

You can list it with an agent, or you can sell it directly. A lot of families who inherit a house this way don't want to deal with cleaning it out, making repairs and keeping up a house nobody's living in.

When you sell to Trademark Properties:

• We buy the house as-is. No repairs, no cleanout.
• No commissions, and we pay the closing costs.
• We close at a local title company, and they'll make sure all the TODD paperwork is in order. If something's missing, they'll tell you what you need.
• You pick the closing date.

We're not attorneys and this isn't legal advice. TODDs are pretty simple most of the time, but if there's a Medical Assistance claim, a beneficiary who passed away, or anything else unusual, talk with a Minnesota probate attorney.

Inherited a house through a Transfer on Death Deed? Give us a call at Call us or fill out the form. We're happy to answer your questions. There's never any obligation!