Virginia Transfer on Death Deed Form
How a Virginia TOD deed form works
A Virginia transfer-on-death deed form (also known as a Virginia TOD deed form) is a relatively new form of deed designed specifically to allow Virginia homeowners to transfer property at death without going through probate. A Virginia TOD deed form is similar to a payable-on-death or transfer-on-death designation on a bank or investment account. It allows the owner to designate a beneficiary to receive property on the owner’s death without the need for probate. The Virginia legislature authorized transfer-on-death deeds by adopting the Uniform Real Property Transfer on Death Act on July 1, 2013.
Virginia TOD deeds are similar to other forms of Virginia deeds in that they transfer the current owner’s interest in real estate to a new owner, called a beneficiary. But unlike most other forms of Virginia deeds, a transfer-on-death deed does not take effect until the owner dies. As long as the owner is still alive, the deed has no effect. Virginia law is clear that, as long as the owner is still alive, the transfer-on-death deed does not:
- Affect any interest or right that the owner has in the property. The owner can still transfer the property to someone else or mortgage it without involving or even notifying the beneficiary listed on the TOD deed.
- Affect any interest that the beneficiary will have in the property. Even if the new owner knows about the TOD deed, the beneficiary has no rights while the owner is still alive.
- Affect any interest that a bank, mortgage lender, or other creditor of the owner may have in the property. Even if the creditor knows about the TOD deed, the creditor’s rights are not affected by it.
- Affect the current owner’s or the beneficiary’s eligibility for public assistance.
- Give the beneficiary’s creditors any rights in the property.
Taken together, these provisions make it clear that the transfer-on-death deed has no practical effect during the current owner’s lifetime. The owner can revoke the deed, sell the property to someone else, or mortgage or lease the property without involving the beneficiary. The deed does not become effective until the owner’s death.
Other names for Virginia transfer-on-death deeds
In Virginia, transfer-on-death deeds are also known as TOD deeds or simply as TODDs. In some states—like Arizona—transfer-on-death deeds are called beneficiary deeds. Each of these terms refer to the same type of statutorily created deed designed to avoid probate at death.
A Virginia TOD deed is similar to a life estate deed and lady bird deed in that each type of deed is intended avoid probate at death. But a TOD deed form differs from a life estate deed or a lady bird deed. Life estate deeds and lady bird deeds have different origins and requirements than TOD deeds. Lady bird deeds are not used in Virginia.
Benefits of transfer-on-death deeds
A Virginia TOD form has several benefits that make it a preferred method for transferring real estate automatically upon the death of an owner:
- Avoiding Probate – The primary benefit of a TOD deed form is probate avoidance. A person who creates a valid Virginia TOD deed can avoid the hassle and legal expense of probate at death.
- Retained Control and Flexibility – During an owner’s life, the TOD deed has no effect. This allows the owner to retain control over the property, including the ability to revoke the deed, sell or mortgage the property, or otherwise deal with the property, all without the beneficiary’s permission or even knowledge.
- Continuity of Ownership – Because the TOD has no effect during an owner’s life, the owner is still treated as owning the property for tax and other purposes. This can be important in states that provide favorable tax treatment for homestead property, as well as for federal tax purposes.
- No Gift Tax Consequences and Basis Step-up – Because a TOD deed can be revoked, it is considered an incomplete gift under the federal gift tax laws. This means that the owner owes no gift taxes on the transfer and the property qualifies for a full basis step-up on the owner’s death.
- Saves Legal Fees and Hassle – The benefits described above can also be obtained by using a living trust. But living trusts are usually more expensive to create and administer after death. A TOD deed form achieves the same benefits without requiring a living trust.
Transfer-on-death deeds and multiple owners or beneficiaries
If the property described in the TOD deed form is owned by joint owners, the deed must be signed by all joint owners. Upon the death of one of the owners, the property described in the TOD deed form will belong to the surviving owner with a right of survivorship, but remains subject to the naming of the designated beneficiary in the deed. The deed does not become effective until the death of the last original joint owner to die. On the death of the last surviving joint owner, the deed will become effective and transfer the property to the designated beneficiaries.
If the TOD deed leaves the property to multiple beneficiaries, each beneficiary receives an equal and undivided share with no right of survivorship. If a designated beneficiary dies before the owner, that beneficiary’s interest passes to the surviving beneficiary. If there are multiple surviving beneficiaries, each beneficiary inherits an equal share of the deceased beneficiary’s interest in the property. If all of the primary designated beneficiaries are deceased, the property passes to the alternate beneficiaries named in the TOD deed (if any).
Situations where transfer-on-death deeds cannot be used
The Virginia Uniform Real Property Transfer on Death Act requires the property owner to have the same capacity as is required to make a will. The Reporter’s Note to the uniform act on which the Virginia act is based specifies that the owner:
must be capable of knowing and understanding in a general way the nature and extent of his or her property, the natural objects of his or her bounty, and the disposition that he or she is making of that property, and must also be capable of relating these elements to one another and forming an orderly desire regarding the disposition of the property.
This capacity requirement—which is more stringent than the requirement for other Virginia deed forms—indicates that an incapacitated owner cannot create a valid TOD deed. This would preclude the creation of a Virginia TOD deed by an agent under a power of attorney if the owner is mentally incapacitated.
Relationship of transfer-on-death deed form to warranty of title and creditor claims
The Virginia Uniform Real Property Transfer on Death Act is clear that a Virginia TOD deed form transfers property with no covenant or warranty of title. Even if the deed attempts to include a warranty of title, the statute will override the requirement and invalidate the warranty of title. There is no way for a person who creates a Virginia TOD deed to provide any warranty of title to the designated beneficiary.
The Virginia Uniform Real Property Transfer on Death Act also makes it clear that the property transferred by Virginia TOD deed remains subject to any creditor claims against the property. This means, for example, that mortgage lenders and other creditors of the deceased owner can look to the property to satisfy debts of the owner. If the owner uses TOD deeds to transfer multiple properties, liability for debts is apportioned among the properties in proportion to their value at the owner’s death. Creditors have a one-year window from the date of the owner’s death to enforce their claims.
How to create a Virginia transfer-on-death deed
The Virginia Uniform Real Property Transfer on Death Act includes specific requirements that must be satisfied for a Virginia TOD form to be valid. These requirements include:
- The deed must include all of the elements required for Virginia deeds, including a properly drafted legal description.
- The deed must state that the transfer to the designated beneficiary occurs at the transferor’s death.
- The deed must be recorded and indexed in the land records of the clerk’s office of the circuit court in the jurisdiction where the property is located. The deed must be recorded before the transferor’s death.
- If the property is jointly owned, all joint owners must sign the TOD deed.
- There is no requirement to notify the beneficiary of the deed.
- There is no consideration
Failure to meet a requirement could invalidate the TOD deed. The Virginia TOD deeds created by our Deed Generator were designed specifically to meet the requirements of the Virginia Uniform Real Property Transfer on Death Act. Each deed comes with step-by-step instructions for completing the transfer with the clerk’s office.