Should You Consider a "Transfer on Death" Deed as Part of Your New Hampshire Estate Plan?

In July 2024, New Hampshire became the 20th state to adopt the Uniform Real Property Transfer on Death Act (URPTODA). This law makes it possible to transfer your home or other real estate by executing a deed naming one or more beneficiaries who will receive the property upon your death. The beneficiaries do not acquire any interest or ownership rights in the property prior to your death, and you are free to revoke a Transfer on Death (TOD) deed at any point during your lifetime.

Is Avoiding Probate Worth It?

A common scenario for a TOD deed goes something like this: Abigail is a widow who owns her home in Manchester. She has a son, Jason, whom she wants to inherit her house when she dies. Abigail could sign a last will and testament leaving the house to Jason. Alternatively, she could sign a TOD deed naming Jason as the beneficiary.

Under the will approach, upon Abigail's death the house becomes part of her probate estate. After the estate's debts and expenses are paid, the house is then distributed to Jason as directed by the will. This process often takes several months. Under a TOD deed, in contrast, Jason automatically takes ownership of the house without first going through probate.

Indeed, avoiding probate was one of the main goals of the Uniform Law Commission (ULC), the nonprofit association that drafted the original URPTODA. The ULC's own talking points argue that TOD deeds are a good alternative for lower income individuals who want to pass on a home to a family member without the time and expense of either probate or more complex estate planning. In that sense, the thinking goes, a TOD deed is no different than having a payable-on-death (POD) designation for a bank account.

Of course, if you designate a POD beneficiary for your checking account and later change your mind, it is relatively simple to file a new designation form with your bank. Revoking a TOD deed after the fact is likely to be far more complicated. Under New Hampshire's implementation of the URPTODA, both recording and revoking a TOD deed require observing certain statutory formalities.

Notably, you must record a new deed for your property. The New Hampshire URPTODA requires a TOD deed be filed while the owner is still alive and within 60 days of execution. Revoking the TOD deed then requires filing either a new deed, a new TOD deed, or a similar written instrument. Unlike a will, which you can revoke simply by destroying the original document, a TOD remains in effect until a new written instrument is signed and recorded with the local register of deeds.

So whether you choose to transfer your home by will or TOD deed, there is still a legal process involved. And there are many estate planning situations where a TOD deed might not be the better choice. In our hypothetical example above, we considered Abigail and her son, Jason. But suppose Abigail had three children. She wants to ensure that each child receives an equal share of her estate, so she signs a TOD deed naming all three as beneficiaries.

Now, it's unlikely that all three adult children will want to live in the house together. But after Abigail dies, they can't agree on what to do with the property. One sibling wants to sell the house but the others refuse to cooperate. The result is everyone ends up litigating the matter in court.

In contrast, if Abigail had left the house as part of her probate estate, she could leave instructions for her executor to sell the property upon her death and divide the cash proceeds equally among the children. Alternatively, Abigail could have worked with her estate planning attorney to create a revocable trust during her lifetime, transferred the house into that trust, and left her successor trustee similar instructions. Either way, the modest expense of going through probate and/or more complex estate planning is more likely to help Abigail achieve her goals--and preempt potential litigation between her children--then going with a TOD deed.

The Risks of Adding Someone to Your Deed During Your Lifetime

Now, there is another alternative to transferring a property by will, trust, or TOD deed. That is signing a deed naming someone else as your joint tenant with rights of survivorship. In other words, Abigail could sign a deed transferring her house from herself, as sole owner, to herself and Jason as joint tenants. Under this arrangement, when Abigail died, Jason automatically becomes the sole owner.

As with a TOD deed, this option keeps the house out of probate. But it also means that Abigail surrenders a certain degree of control over the property while she is still alive. As the ULC noted in its own talking points, "Joint titling exposes the property to the joint tenant's creditors, and gives the joint tenant the power to approve or disapprove a sale."

In other words, if Abigail makes Jason a joint tenant during her lifetime, he would then be able to stop her from selling or mortgaging the property without his consent. Under a TOD deed, however, Abigail retains the full right to do either of these things without Jason's approval. As the beneficiary under a TOD deed, Jason acquires no rights in the property until his mother's death.

So if you are in a situation where you plan to leave a property to someone and are determined to avoid either probate or creating a trust, a TOD deed may be a viable option, at least compared to adding a joint tenant during your lifetime.

Contact Normand Higham, P.A., Today

Before making any decisions on how to dispose of your property upon death, you should first speak with a dedicated New Hampshire estate planning attorney. Attorney Maureen Higham can review your situation and advise you on an estate planning strategy that meets your goals while minimizing the risk of future legal disputes. Contact her today at 603-624-6655 to schedule an initial consultation.