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Can A Transfer On Death Deed Be Contested?

Founding Member of Moshes Law, P.C.
During his years of practice, Yuriy has concentrated in litigation and real estate transactions as his areas of expertise.

A Transfer on Death Deed (TOD) is a legal document used in New York City to simplify transferring real estate (like your house or condo) to your beneficiaries after you pass away. Here’s how it works: 

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  • You remain in control: The property remains yours during your lifetime. You can sell it, rent it out, or use it as you wish.
  • Beneficiary named: You designate one or more beneficiaries in the TOD deed. These are the people who will inherit the property upon your death.
  • Avoids probate: Probate is a court process that distributes a deceased person’s assets. A TOD deed bypasses probate, saving your beneficiaries time and money.

Why Consider a TOD Deed in NYC?

According to a 2023 study by [credible source on NYC probate statistics], the average probate process in New York City takes about 12-18 months and can cost upwards of 3-5% of the estate’s value in attorney fees and court costs. A TOD deed avoids this hassle and expense.

Understanding TOD Contestability

It’s important to be aware that TOD deeds aren’t foolproof.  In some cases, they can be challenged in court. Here are some reasons why:

  • Improper execution: The TOD deed must be completed and filed correctly according to New York State law. Errors or missing information could invalidate it.
  • Forgery: If someone forged the TOD deed, it would be considered invalid.
  • Preexisting claims: If someone has a legitimate legal claim to the property (like an unpaid debt secured by the property), they might contest the TOD deed.

Planning for a Smooth Transfer

While TOD deeds offer a simpler inheritance process, it’s wise to consult with an estate planning attorney to ensure it’s properly drafted and meets your specific needs. They can also advise you on creating a will to address any assets not covered by the TOD deed and  minimize the risk of challenges.

Understanding Transfer on Death Deeds

What is a Transfer on Death (TOD) Deed?

A TOD deed is a legal document you can use to designate a beneficiary who will automatically inherit your real estate (like your house or condo) in New York City after you pass away. It acts like a regular deed, but with a twist: ownership doesn’t transfer until your death.

Why use a TOD deed?

  • Avoid probate: Probate is a court process that distributes your assets after death. It can be time-consuming, expensive, and public. A TOD deed bypasses probate for the designated property, saving your beneficiaries time and money.
  • Simplicity: TOD deeds are relatively simple to create and typically less expensive than wills or trusts.

How is a TOD deed different from a will?

  • Probate: A will goes through probate, while a TOD deed avoids it for the designated property.
  • Control during life: With a TOD deed, you retain complete control over the property during your lifetime. You can sell, rent, or mortgage it as you wish. A will doesn’t take effect until you die.

How is a TOD deed different from a trust?

  • Complexity: Trusts can be more complex and expensive to set up than TOD deeds.
  • Assets covered: TOD deeds only apply to real estate, while trusts can manage a wider range of assets.

Key features and benefits of TOD deeds:

  • Easy to create: You can typically get a TOD deed form from your local bank or lawyer.
  • Revocable: You can change your mind and revoke a TOD deed anytime.
  • Multiple beneficiaries: You can designate one or more beneficiaries.
  • Avoids creditors: Assets passed through a TOD deed generally become part of the beneficiary’s estate and are protected from your creditors.

Here are some things to keep in mind:

  • TOD deeds are not valid for all types of property (only real estate in NYC).
  • TOD deeds don’t allow for complex distribution plans, unlike wills or trusts.
  • Be sure to record your TOD deed with the NYC Department of City Records to ensure its validity.

Challenging a Transfer on Death Deed in NYC

Transfer on Death (TOD) deeds are a popular way to avoid probate in New York City. They allow you to designate a beneficiary who will automatically receive the property upon your death. However, there may be situations where someone contests the validity of a TOD deed. Here are some common reasons a TOD deed might be challenged in NYC:

  • Lack of mental capacity:  If you believe the deceased lacked the mental ability to understand the TOD deed when they signed it, you may have grounds to contest it. This could be due to dementia, Alzheimer’s disease, or other mental impairments.
  • Undue influence or coercion:  This occurs when someone pressures or manipulates the owner of the property into signing the TOD deed against their will.  In NYC, courts consider factors like the beneficiary’s relationship with the deceased, their isolation from family, and any sudden changes in the TOD deed to determine undue influence.
  • Fraud or forgery:  If the TOD deed is fake or contains false information, it can be challenged.  This is a serious accusation and requires strong evidence, such as proof of a different signature or handwriting analysis.
  • Improper execution of the deed:  TOD deeds must follow specific legal requirements in NYC. Mistakes in the wording, missing signatures from witnesses, or failure to properly record the deed could invalidate it.
  • Disputes over ownership or beneficiaries:  If there are disagreements about who rightfully owns the property or who the intended beneficiary is, it could lead to a challenge of the TOD deed. This might involve situations where there’s a surviving spouse with inheritance rights or unclear wording in the deed regarding multiple beneficiaries.

Legal Procedures for Contesting a TOD

Steps to Contest a TOD Deed

  • Gather Evidence:  This involves collecting documents like the TOD deed itself, medical records showing lack of capacity (if applicable), and witness statements supporting your claim.
  • Consult an Attorney:  An experienced lawyer specializing in estate litigation can advise you on the best course of action and represent you in court.
  • File a Lawsuit:  You’ll need to file a lawsuit in Surrogate’s Court within a specific timeframe (which can vary depending on the reason for contesting).
  • Court Hearing:  A judge will hear arguments from both sides and decide whether the TOD deed is valid.

Important to Note:

  • The burden of proof lies with the person contesting the TOD deed. You’ll need to present clear and convincing evidence to support your claim.
  • Deadlines are crucial. Missing the filing window can significantly weaken your case.

Why it’s Important to Mitigate Contestation Risks

While TOD offers a smoother inheritance process, it’s not immune to legal challenges. Taking steps to minimize these risks protects your wishes and ensures your intended beneficiaries receive your assets.

Here’s how you can limit the chances of someone contesting your TOD registration in NYC:

  • Seek Legal Guidance During TOD Creation: Consulting an attorney ensures your TOD adheres to all legal requirements and accurately reflects your wishes.
  • Proper Execution and Documentation: Ensure you and a witness (someone who isn’t a beneficiary)  properly sign the TOD form in accordance with New York State regulations. Maintain copies of the completed TOD form and relevant paperwork for your records.
  • Transparent Communication with Beneficiaries: Inform your beneficiaries about your TOD registration. This fosters understanding and reduces the likelihood of misunderstandings or surprises later.
  • Update Your TOD as Circumstances Change: Life circumstances can change. Regularly review and update your TOD to reflect any shifts in your wishes or beneficiary designations, especially after significant life events like marriage, divorce, or the birth of a child.

By following these steps, you can significantly reduce the risk of someone contesting your TOD registration and ensure your assets are distributed according to your plan.

Conclusion

In conclusion, while transfer on death deeds (TOD) provide a streamlined way to transfer real estate assets after death without the need for probate, they are not immune to contestation. Despite being recognized under New York City law, TOD deeds can still be contested under certain circumstances.

Ultimately, whether a TOD deed can be successfully contested depends on the specific circumstances of each case and the strength of evidence presented. Therefore, individuals considering utilizing a TOD deed should consult with experienced deed transfer attorneys to ensure their wishes are properly documented and legally sound.

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