NY Transfer on Death Deed: Not Legal

No TODD in NY? How to Protect Home

You may have read online about a simple, powerful tool to pass your home to your children without probate. It’s called a “Transfer on Death Deed,” or “TODD.” Many states have adopted this tool, allowing homeowners to designate a beneficiary who automatically inherits their real estate upon their death, much like a bank account. It sounds simple, fast, and cheap.

Here is the critical, non-negotiable fact for New Yorkers: New York State does not recognize Transfer on Death Deeds for real estate.

Let us be perfectly clear. Any document you download or create that claims to be a “Transfer on Death Deed” for a property in New York City, Long Island, or anywhere in the state, is invalid. It will not work. Your property will not pass to your chosen beneficiary. Instead, it will be thrust directly into the New York Surrogate’s Court system, leading to the very probate process you sought to avoid. This is a dangerous trap that ensnares many well-intentioned homeowners.

But why does New York reject this tool? And, more importantly, what is the *correct* way to protect your home—often your most valuable asset—from probate, creditors, and elder law costs? This comprehensive guide, written by the 30-year estate planning attorneys at Morgan Legal Group, will explain New York’s position and detail the superior, legally-sound strategies you must use instead. Contact us before making a costly mistake.

What is a Transfer on Death Deed (and Why Don’t We Have Them)?

A Transfer on Death Deed is a relatively new legal instrument. In states that permit them, a property owner can record a TODD that names a beneficiary. The owner retains full control of the property while alive. They can sell it, mortgage it, or even revoke the TODD. At the owner’s death, the property automatically passes to the beneficiary, bypassing probate court entirely.

It sounds like a perfect solution. However, the New York legislature has consistently declined to adopt TODD legislation. There are several complex reasons for this, rooted in New York’s long-standing legal traditions.

Why New York Rejects TODDs

New York’s probate system, while complex, is designed to provide a high level of oversight. The legislature has shown a preference for methods that offer more robust protections.

• Concerns of Undue Influence: A deed is a simple document. Lawmakers worry that a TODD could be signed under duress or as a result of elder abuse, with less oversight than a formal will execution.
• Creditor Rights: The probate process establishes a clear system for notifying and paying the decedent’s creditors. TODDs can complicate this, potentially making it harder for creditors to make legitimate claims against the estate.
• Medicaid Recovery: New York has a strong interest in its Medicaid Estate Recovery Program (MERP). TODDs could potentially frustrate the state’s ability to place liens on property to recoup the cost of long-term care.
• Title and Chain of Title Issues: TODDs can create confusion for title insurance companies, especially if there are multiple beneficiaries, a beneficiary who predeceases the owner, or subsequent wills that contradict the deed.

In short, New York law favors more formal and protective methods for transferring real estate. The primary, and most effective, of these methods is the Trust.

The “Wrong” Ways New Yorkers Try to Avoid Probate

Because New York lacks the “easy” TODD option, homeowners often resort to “DIY” strategies. These methods are not just ineffective; they are actively dangerous. They can lead to devastating financial consequences, loss of control, and intense family conflict. As Russel Morgan, Esq., often advises clients, “The quick fix is often the most expensive one.”

Danger #1: Adding a Child to Your Deed (Joint Tenancy)

This is the most common mistake we see. A parent, often a widow, decides to “add” their adult child to the deed of their Queens or Brooklyn home. They create a “Joint Tenancy with Right of Survivorship” (JTWROS). The thinking is that when the parent dies, the child automatically owns the entire house. This is true. However, it comes at a catastrophic cost.

When you add your child to your deed, you have not created a beneficiary. You have made them a co-owner. Effective immediately, you have given away half of your house.

• Loss of Control: You can no longer sell or mortgage your home without your child’s signature. If they refuse, you are stuck.
• Exposure to Their Creditors: Is your child in debt? Do they have a failing business? Are they being sued? Their creditors can now place a lien on *your* home.
• Exposure to Their Divorce: Is your child married? If they get divorced, their spouse may claim an interest in *your* home as part of the marital property.
• Medicaid Ineligibility: This transfer is a “gift” that triggers a five-year look-back period for Medicaid. If you need nursing home care within five years, you will be penalized and deemed ineligible.
• Disinheriting Other Children: If you add only *one* child to the deed, that child gets the *entire* house. It does not matter what your will says. The deed overrides the will. Your other children are legally disinherited from the property.

This “simple” solution is a legal and financial minefield. It puts your single most valuable asset at immediate risk.

Danger #2: The Capital Gains Tax Trap (Losing the “Step-Up”)

This is the most painful financial consequence of adding a child to a deed. When you give property to a child, they receive your “cost basis.” When they *inherit* property, they receive a “stepped-up basis.” This difference is worth millions.

Let’s use an example:

• Scenario (The Wrong Way – Gifting): You bought your Staten Island home in 1985 for $200,000 (your “basis”). Today, it’s worth $2,200,000. You add your son to the deed in 2025. You die. Your son now owns the whole house. His basis is your original $200,000. He sells the house for $2,200,000. He has a $2,000,000 capital gain. He will owe hundreds of thousands of dollars in federal and state capital gains tax.
• Scenario (The Right Way – Inheriting): You place your $2,200,000 home in a trust. You die. Your son inherits the house. The cost basis is “stepped up” to the fair market value on your date of death. His new basis is $2,200,000. He sells the house the next day for $2,200,000. His capital gain is $0. He owes no capital gains tax.

By trying to avoid a probate fee, you could accidentally stick your child with a $400,000+ tax bill. This is a devastating and completely avoidable error.

Danger #3: The “Life Estate” Deed

Another tool some try to use is a Life Estate deed. With this, you transfer the property to your children (the “remaindermen”) but “reserve” the right to live in it for the rest of your life (the “life estate”).

This is slightly better than joint tenancy, but still deeply flawed:

• It’s Irrevocable: Once you file that deed, you cannot undo it without your children’s consent. You have given away ownership.
• Loss of Control: You cannot sell or mortgage the property unless all your children (and sometimes their spouses) agree and sign the papers.
• Medicaid Issues: While a life estate can avoid Medicaid *estate recovery*, the transfer *itself* is a gift that triggers the 5-year penalty period.
• Future Conflicts: What if a child dies before you? Their share may pass to their spouse or children, creating a fractured ownership nightmare.

These “shortcuts” are not solutions. They are traps. The legally correct, most flexible, and most protective tool in New York is a trust.

The New York Solution: Why Trusts are the “Gold Standard”

Since New York does not offer TODDs, the state’s entire estate planning framework is built around a more robust tool: the Trust. A trust is a private legal agreement. It creates a separate legal entity to hold your assets for your benefit while you are alive, and for the benefit of your heirs after you are gone. It is the single best way to protect New York real estate.

There are two primary types of trusts we use for this purpose:

1. The Revocable Living Trust (The Probate-Avoidance Tool)
2. The Irrevocable Trust (The Asset-Protection Tool)

Understanding the difference is key to protecting your family. The team at Morgan Legal Group has 30 years of experience designing these trusts for thousands of New Yorkers.

Part 1: The Revocable Living Trust (RLT)

A Revocable Living Trust is the most common tool for avoiding probate. It is the *correct* answer to the question “How do I avoid probate on my home?” It does everything a TODD promises, but with far more power, flexibility, and protection.

Here is how it works:

1. You contact our firm, and we draft a trust document.
2. You are named the “Grantor” (creator) and the “Trustee” (manager). You are in 100% control.
3. We then “fund” the trust by preparing and filing a new deed. This deed transfers your home from “Jane Smith” to “The Jane Smith Revocable Trust.”
4. You still own your home. For tax purposes, nothing has changed. Your property taxes, mortgage interest, and tax exemptions (like STAR) are unaffected.

The magic happens when you pass away or become incapacitated.

Benefit 1: Complete Probate Avoidance

When you die, “The Jane Smith Revocable Trust” does not die. It’s a legal entity that lives on. The person you named as your “Successor Trustee” (e.g., your responsible child) immediately has the legal authority to manage the trust’s assets. They can pay your final bills and distribute the property to your named beneficiaries exactly as you instructed. There is no court. No probate. No delays. No public filings. It is 100% private and efficient.

Benefit 2: Total Control and Flexibility

Unlike a life estate or adding a child to a deed, a Revocable Trust is 100% revocable. You are the boss. You can:

• Sell the house at any time.
• Refinance the property.
• Change the beneficiaries.
• Amend the trust.
• Revoke the entire trust and take the house back in your own name.

You give up zero control. This is the exact opposite of the dangerous “DIY” methods.

Benefit 3: Incapacity Protection (Avoiding Guardianship)

This is a benefit that is arguably more important than probate avoidance. What if you have a stroke or develop Alzheimer’s? If your home is in your name, no one can sell it to pay for your care without a court order. Your family would have to file a costly and humiliating guardianship proceeding (Article 81) to have you declared incompetent.

With a Revocable Trust, this is avoided. The trust document states that if you are certified incapacitated by your doctors, your Successor Trustee automatically steps in. They can immediately manage your finances and your property, all without a public court case. This guardianship avoidance is a core part of modern estate planning.

Benefit 4: Preserving the “Step-Up in Basis”

A Revocable Trust 100% preserves the step-up in basis. Your children will inherit the property through the trust at its full, date-of-death value. This single feature, as shown in our example, can save your family hundreds of thousands of dollars in capital gains tax. This alone makes a trust worth the investment.

Part 2: The Irrevocable Trust (Asset Protection)

A Revocable Trust is a powerful tool, but it has one limitation: it does *not* protect your home from your *own* creditors or from the high cost of long-term care. Because you control it, it is “available” to you and, therefore, available to nursing homes or a lawsuit. For this, we need an Irrevocable Trust.

This is the primary tool of NYC elder law.

• The Problem: Nursing homes in New York can cost $20,000 per month. To qualify for Medicaid to pay this bill, you must have almost no assets. Medicaid can also “claw back” the money from your estate after you die.
• The Solution: A Medicaid Asset Protection Trust (MAPT). This is an irrevocable trust. You transfer your home into it. You are *not* the trustee. You give up control.
• The 5-Year Look-Back: This transfer triggers Medicaid’s five-year “look-back” period. After five years have passed since you funded the trust, the house is 100% protected. It is no longer considered “your” asset. You can qualify for Medicaid, and the state cannot touch your home.

This is a sophisticated strategy for homeowners in their 60s and 70s who are planning for the future. It is the *only* way to protect your home from long-term care costs. An elder law attorney can advise if this is right for you. It also can be used for estate tax planning, especially with the 2026 federal exemption sunset approaching.

Comparative Analysis: Scenarios in Practice

Let’s see how these strategies play out for real New York families. The difference between a simple mistake and proper planning is life-changing. Morgan Legal Group, led by Russel Morgan, has seen all of these scenarios.

Scenario 1: Maria in the Bronx

Maria is 75. Her home in the Bronx is worth $800,000. She has two children, one responsible son and one daughter with debt problems. She wants to leave the house to her son.

• Wrong Way (Joint Tenancy): Maria adds her son to the deed. A year later, her son’s business fails, and he has a $150,000 judgment against him. The creditor places a lien on *Maria’s house*.
• Wrong Way (Will): Maria leaves the house to her son in her will. She dies. The will goes to probate. Her daughter, angry she was cut out, contests the will. The estate is frozen in litigation for three years, costing $80,000 in legal fees.
• Right Way (Revocable Trust): Maria creates a trust. She names her son as the sole beneficiary of the home. She dies. The trust is private. The daughter never even sees the document. The son, as successor trustee, files a new deed transferring the house to himself. The process takes two weeks. It is private and contest-proof.

Scenario 2: David and Sarah in Westchester

David and Sarah, 68 and 65, have a home in Westchester worth $1.8M and $1M in investments. Their main concern is long-term care.

• Wrong Way (Do Nothing): David has a stroke and needs nursing home care. They spend their entire $1M in savings. When that’s gone, David qualifies for Medicaid. He passes away. Medicaid then places a lien on the $1.8M home to recover the $300,000 it spent on his care. Sarah must sell the home.
• Right Way (MAPT): They schedule an appointment with an elder law attorney. They create an Irrevocable Medicaid Asset Protection Trust. They transfer their home into it. Six years later, David has a stroke. Because the house has been in the trust for over five years, it is 100% protected. David qualifies for Medicaid, their $1M in savings is safe, and the state cannot touch their $1.8M home.

Scenario 3: Frank in Long Island

Frank, 82, is a widower in Long Island. His home is in his name alone. He has a valid power of attorney (POA) appointing his daughter. Frank develops dementia and needs to move to assisted living. The family needs to sell the house to pay for it.

• The POA Problem: Frank’s daughter tries to sell the house. The buyer’s title company *rejects* the Power of Attorney. They say it’s “stale” (too old) or not specific enough for a real estate transaction. This happens *all the time*.
• The Only Fix: The daughter must now go to court to start a guardianship proceeding to get legal authority to sell the home. This takes 6 months and costs $15,000.
• The Trust Solution: If Frank’s home had been in a Revocable Trust, his daughter (as successor trustee) would have had *immediate* legal authority to sell the home. No court, no title company rejection, no guardianship.

Frequently Asked Questions: New York Trusts vs. TODDs

As estate planning attorneys with 30 years of experience, we hear the same questions every day. Here are the clear answers.

Q1: I found a “New York Transfer on Death Deed” form online. Are you sure it’s invalid?

Yes, we are 100% certain. It is legally invalid. A website that offers this form is either mistaken or fraudulent. Recording this deed will cloud the title to your property. It will fail upon your death, and your home will go to probate. Do not use it.

Q2: Isn’t a trust very expensive and complicated?

This is a myth. A Revocable Trust is a one-time investment. In contrast, the probate process in New York is far more expensive. Probate involves court filing fees, executor commissions, and attorney’s fees, which can total 3-7% of your estate’s value. A trust costs a fraction of that and saves your family time, money, and stress.

Q3: If my house is in a Revocable Trust, can I still sell it?

Yes. You, as the Trustee, have 100% authority. You sign the sales contract and the new deed as “Jane Smith, Trustee of the Jane Smith Revocable Trust.” The process is identical to selling it in your own name. The same applies to getting a mortgage or a HELOC.

Q4: Will a Revocable Trust increase my property taxes?

No. For all tax purposes (property, income, capital gains), a Revocable Trust is a “grantor trust.” This means it is invisible to the IRS and New York State. You will keep your STAR exemption, veteran’s exemption, and any other benefits. You will continue to file your taxes under your own Social Security number.

Q5: What’s the difference between a Will and a Revocable Trust?

This is the most important distinction.

• A Will is a set of instructions for the probate court. A Will, by definition, guarantees probate. It does not avoid it.
• A Trust is a private contract that avoids probate. It completely replaces the court process for all assets held within the trust.

A modern estate plan includes *both*. The trust does the “heavy lifting” for your major assets, and a special “Pour-Over Will” acts as a safety net to catch any assets you forgot to put in the trust.

Q6: What is “funding” the trust? Is it difficult?

Funding is the most critical step. A trust is an empty box. “Funding” is the process of putting your assets into the box. For real estate, this means filing a new deed. For bank accounts, it means changing the title. A good law firm like Morgan Legal Group does not just give you a fancy binder; we guide you through every step of the funding process to ensure your plan actually works.

Q7: I own property in New York and Florida. What happens?

This is a perfect reason for a trust. If you own property in multiple states, your family will face *multiple probates*. This is called “ancillary probate.” Your estate will have to be probated in your home state of New York, and *also* in Florida. By placing both properties into a single Revocable Trust, your successor trustee can manage and sell both properties with no probate in *either* state. This saves an enormous amount of time and money.

Your Next Step: Stop Searching for Shortcuts

The “internet solution” of a Transfer on Death Deed is a dangerous illusion in New York. The law is clear, and the risks of “DIY” planning are immense. You risk your family’s financial future by adding a child to your deed. You risk their inheritance being lost to capital gains taxes. You risk exposing your home to lawsuits, divorce, and creditors.

The right way is the proven way. A Revocable Living Trust is the “gold standard” in New York for a reason. It achieves every goal a TODD promises but adds critical protections for incapacity, tax savings, and privacy that a simple deed never could. If you are concerned about long-term care costs, an Irrevocable Trust is the only tool for the job.

This is not a “do-it-yourself” project. Protecting your home requires the guidance of an experienced New York estate planning attorney. You only get one chance to get this right. We see our firm’s positive impact in our client testimonials. As one review on Google states, the peace of mind is invaluable.

Contact Morgan Legal Group Today

Your home is the center of your family and the foundation of your legacy. Don’t leave its future to chance, to bad internet advice, or to the delays and costs of New York’s probate court. The 30-year legal team at Morgan Legal Group is ready to build your fortress.

We serve clients across the entire New York area, from Buffalo to Albany and all five boroughs. Schedule a consultation with our team today. We will review your assets, listen to your goals, and design a custom plan that protects your property, your family, and your legacy. The time to act is now.

For more information on New York’s real property laws, you can review the state’s consolidated laws at the New York State Senate website, which demonstrate the absence of a TODD statute.

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