If you own a home or other real estate in Washington State, you've probably wondered: What happens to my property when I die? Without any planning, the answer is often "it goes through probate."  Probate is a court-supervised process that takes time, costs money, and is public record. One tool that can help you sidestep probate for real estate is a Transfer on Death Deed, often called a "TODD" or a "beneficiary deed."

Here's what you need to know.

What Is a Transfer on Death Deed?

A Transfer on Death Deed is a legal document that lets you name one or more people (or organizations) to automatically receive your real estate when you die, without going through probate court. Think of it like a beneficiary designation on a life insurance policy or a retirement account, but for real property.

Washington State enacted the Uniform Real Property Transfer on Death Act (found at Chapter 64.80 of the Revised Code of Washington) in 2014, making TODDs a recognized and legally enforceable planning tool in our state.

How Does It Work?

1. You sign and record the deed while you're alive. The owner of the property completes a Transfer on Death Deed naming the chosen beneficiary or beneficiaries, signs it in front of a notary, and records it with the county auditor in the county where the property is located. The deed must be recorded before the owner dies in order to be valid.

2. Nothing changes during your lifetime. This is an important point that surprises many people: recording a TODD does not give your beneficiary any current interest in the property. You remain the sole owner. You can continue to sell the property, refinance it, rent it out, or change your mind about the beneficiary, all without your beneficiary's knowledge or consent.

3. You can revoke it at any time. Changed your mind? You can cancel a Transfer on Death Deed at any time while you're alive, simply by recording a revocation or a new TODD naming a different beneficiary. The beneficiary has no right to object.

4. At your death, the property transfers automatically. When you die (if you still own the property at that time) title passes directly to the beneficiary you named. They do not have to go through probate to claim the property. They will typically need to record a certified copy of your death certificate with the county auditor, and the property is theirs.

5. The beneficiary must survive you. If your named beneficiary dies before you, the gift lapses and the property passes through your estate as if the TODD had never existed. This is why it's wise to name an alternate (contingent) beneficiary as a backup.

Who Can Be a Beneficiary?

You have flexibility here. You can name any of the following as beneficiaries of a transfer on death deed:

• An individual (a spouse, child, friend, sibling, etc.)
• Multiple individuals (they'll receive equal shares as tenants in common, unless you specify otherwise)
• A trust
• A charity or nonprofit
• A business entity

You can also name alternate beneficiaries, for example, "to my daughter Jane, but if she does not survive me, then to my grandchildren in equal shares."

The Advantages of a Transfer on Death Deed

It Avoids Probate

This is the biggest draw. Probate in Washington can take anywhere from six months to well over a year, and it involves court fees, attorney fees, and a public filing process. A TODD lets your real estate pass to the people you choose quickly and privately, without any court involvement.

It's Simple and Relatively Inexpensive

Compared to creating a living trust (another common probate-avoidance tool) a TODD can be much simpler and less expensive to set up. There's no trust to administer, no separate tax ID number to obtain, and no need to "fund" the deed by retransferring assets.

You Keep Full Control During Your Lifetime

Unlike giving your home to your children now (a gift deed), a TODD doesn't affect your ownership at all while you're alive. You keep all the same rights to sell, mortgage, lease, or simply live in the property. Your beneficiary has zero rights until you die.

No Gift Tax Consequences

Because you haven't actually transferred anything during your lifetime, recording a TODD is not a taxable gift.

It's Revocable

Life changes. You can update your TODD if your relationships change, if your beneficiary predeceases you, or if you simply change your mind. A living trust also offers this flexibility, but a will does not allow you to change beneficiaries after death. A TODD can be revoked or changed right up until you die, provided that you are of sound mind at the time of revocation.

Stepped-Up Tax Basis for Your Beneficiary

When your beneficiary inherits the property through a TODD, they generally receive a "stepped-up" tax basis. This means that their cost basis for capital gains purposes is the fair market value of the property at your date of death, not what you originally paid for it. This can significantly reduce (or eliminate) capital gains tax if they sell the property soon after inheriting it.

Potential Downsides of a Transfer on Death Deed

It Only Covers Real Estate

A TODD transfers title to real property (otherwise known as "real estate"). It does nothing for your bank accounts, investments, personal property, vehicles, or business interests. If you want a comprehensive, probate-free estate plan, you'll likely need additional planning tools (like beneficiary designations on accounts, a living trust, or a carefully drafted will).

Your Estate's Creditors Can Still Make Claims

Here is something many people don't realize: a TODD does not protect the property from your creditors. Under Washington law, beneficiaries who receive property through a TODD can be held personally liable for the deceased owner's valid debts, unpaid taxes, and statutory allowances (such as a surviving spouse's right to an elective share) up to the value of the property they received. If your estate has significant debts, your beneficiary may be required to contribute to paying them.

Medicaid Estate Recovery Is a Complicating Factor

If you received Medicaid-funded long-term care benefits (such as nursing home care through Washington Apple Health), the state has the right to seek reimbursement from your estate after your death. While a TODD passes property outside of probate, this area of the law is genuinely complex and has been the subject of ongoing debate and legislative attention in Washington. If Medicaid planning is a concern for you or a family member, please do not rely on a TODD as a solution without first speaking with an elder law attorney.

It Doesn't Help If You Become Incapacitated

A TODD only takes effect at death. It does nothing to help manage your property if you become incapacitated due to illness or injury. For that, you need a durable power of attorney or a living trust with successor trustee provisions.

Multiple Beneficiaries Can Create Complications

If you name multiple beneficiaries and they inherit the property together, they may disagree about what to do with it (sell it, rent it, or keep it). Without a clear shared plan, co-ownership disputes can be difficult and costly to resolve. A trust with a designated trustee can sometimes handle these situations more smoothly.

No Built-In Protection for Minor Beneficiaries

If you name a minor child as a beneficiary and they inherit real property, a court-supervised guardianship may be required to manage their interest until they reach adulthood. A trust is usually a better vehicle for leaving property to minor children or grandchildren.

A Later Deed Can Inadvertently Revoke Your TODD

If you later refinance your home or transfer it into a living trust and a new deed is recorded, this could affect your TODD. It's important to review your estate plan whenever you make a change to the title of your real property.

Is a Transfer on Death Deed Right for Your Situation?

A TODD can be an excellent planning tool, particularly for people who:

• Own one piece of real estate and want a simple way to pass it to a spouse, child, or other individual
• Want to avoid probate without the cost and complexity of a living trust
• Have a relatively uncomplicated estate without significant debt or Medicaid considerations
• Already have other planning in place (beneficiary designations, a will, a power of attorney) and need a solution specifically for their home

A TODD may not be the best choice if you:

• Have a complex family situation (blended family, minor children, beneficiaries with special needs)
• Are concerned about Medicaid eligibility or estate recovery
• Have significant debts or potential creditor issues
• Want to leave property to multiple beneficiaries who may not agree on how to handle it
• Need asset protection planning

The Bottom Line

Transfer on Death Deeds are a useful, cost-effective tool in the estate planning toolbox.  But (like any tool), they work best when used in the right situation. A TODD is not a substitute for a complete estate plan, and in some circumstances, other approaches (like a living trust) may serve you better.

Before you record a Transfer on Death Deed, it's worth having a conversation with an estate planning attorney who knows Washington law and can look at your full picture. Every family is different, and the right plan for your neighbor may not be the right plan for you.

If you are seeking assistance with estate planning, probate, adoption, real estate transactions, or business legal questions, please don't hesitate to reach out to the experienced team at Limitless Law PLLC.

Call 360-685-0145 or click here to learn more.