Transfer-on-death deeds in Oklahoma, in plain English

What a transfer-on-death deed does

Thinking about what happens to a parent's house, or your own, is not easy. A transfer-on-death deed is one of the simpler tools Oklahoma offers. Here is what it is, in plain words.

A transfer-on-death deed, often called a TOD deed, lets a homeowner name who will own the house after they die. Oklahoma's law for it is the Nontestamentary Transfer of Property Act (58 O.S. §1251). Under 58 O.S. §1252, the deed transfers ownership when the owner dies, not before.

While the owner is alive, nothing changes. The owner keeps full ownership. Under 58 O.S. §1257, they are still the owner as far as buyers and creditors are concerned. They can live there, sell the house, or refinance. The people named, called beneficiaries, don't have to sign it, agree to it, or even be told about it (58 O.S. §1252).

One thing up front: we don't write deeds, wills, or trusts. An Oklahoma attorney should prepare a TOD deed. This page explains how they work so you know what questions to ask.

How it keeps the house out of probate

When someone dies owning a house in their name alone, the house often has to go through probate before anyone can sell it or move it into an heir's name. That can take months, and it costs money.

A TOD deed is built to skip that step for the house. Oklahoma law says a TOD deed made the right way is not treated as a will (58 O.S. §1258). The house passes to the named beneficiaries when the owner dies, as long as they record their acceptance on time. If the rest of the estate is simple, the family may not need probate at all. Your attorney can tell you whether the other assets still need it.

The house does not pass on its own, though. The beneficiaries have a deadline to meet. More on that below.

The rules for making one

Oklahoma law sets out how a TOD deed has to be made. In short:

• The owner signs it. Under 58 O.S. §1252, the deed must be signed by the record owner of the property.
• It is notarized, with two witnesses. The form in 58 O.S. §1253 has the owner sign before a notary, with two witnesses present who also sign.
• It is recorded before the owner dies. The deed must be recorded with the county clerk in the county where the house sits, before the owner's death (58 O.S. §1253). In Tulsa County, that's the Tulsa County Clerk. A deed signed but left in a drawer does not work.

A TOD deed can name one person or several. It can also cover minerals and other interests in land, not just the house (58 O.S. §1252).

If a named beneficiary dies before the owner, their share generally lapses (58 O.S. §1255). The exception is when the deed names the beneficiaries as joint tenants with right of survivorship. This is one of many reasons to have an attorney draft it and to review it after a death in the family.

After the owner dies: the nine-month deadline

This is the part families most often miss.

Under 58 O.S. §1252, each beneficiary who wants to accept the house must sign an affidavit. The affidavit confirms the owner's death, whether the owner and that beneficiary were married at the time of death, and the legal description of the property. A copy of the death certificate is attached.

For an owner who died on or after November 1, 2011, the affidavit and documents must be recorded with the county clerk within nine months of the death. If they aren't, the law says the interest goes back to the deceased owner's estate (58 O.S. §1252).

That matters. If the interest goes back to the estate, the house may need probate or another court process after all. And the people who inherit through the estate may not be the same people the deed named.

Each beneficiary accepts only for themselves (58 O.S. §1252). One sibling can't accept for another. If three children are named, each one needs to record their own acceptance.

If you are named on a TOD deed and a parent has died, call a probate attorney soon. Don't wait until month eight.

When a power of attorney signed the deed

Sometimes an adult child holds a power of attorney for an aging parent. It can seem natural for that child to sign a TOD deed on the parent's behalf. That can cause a serious problem.

Oklahoma law says a TOD deed must be signed by the record owner (58 O.S. §1252). An Oklahoma appeals court has held that an agent under a power of attorney could not sign a TOD deed for the owner. A deed that isn't valid may also fail to cancel an earlier TOD deed.

What this looks like on paper: the signature line or notary block says someone signed "as attorney-in-fact" or "as POA" for the owner, instead of the owner signing personally.

If you see that on a deed in your family, don't assume the house passed the way everyone expected. Take a copy to an attorney. And if a parent is planning a TOD deed now, ask the attorney who should sign it.

Changing or canceling a TOD deed

A TOD deed can be changed or canceled any time before the owner dies. The beneficiaries don't have to agree or be told (58 O.S. §1254). The owner can:

• Record a revocation. A signed, notarized revocation recorded with the county clerk cancels the designation.
• Record a new TOD deed. A later TOD deed for the same property cancels earlier ones.

A will can't do it. Under 58 O.S. §1254, a TOD deed recorded the right way can't be revoked by a will. If someone changes their will but not the deed, the deed generally still controls the house. Ask an attorney.

Common problems with TOD deeds

A TOD deed is useful, but these problems come up often. Two are covered above: a missed nine-month deadline, and a deed signed by a power of attorney. Here are the others.

• It doesn't erase the mortgage or liens. Under 58 O.S. §1255, beneficiaries take the house subject to mortgages, liens, and other recorded claims made during the owner's life. A reverse mortgage or home equity loan still has to be dealt with.
• It doesn't settle the owner's other debts. Whether the owner's unpaid creditors can reach a house that passed by TOD deed is a question for an attorney.
• It may not protect the house from Medicaid estate recovery. Oklahoma's Medicaid program can seek repayment from some estates and can place liens on real property in some cases. If a parent is on Medicaid or may need nursing home care, talk to an elder-law attorney before relying on a TOD deed.
• It doesn't split the house fairly by itself. If the deed names only some of the children, the others have no share in the house through the deed. That can strain a family. We have helped step-siblings who disagreed work through to a sale.
• A beneficiary dies before the owner. What happens to that share depends on how the deed is worded. Read the deed for a backup name.
• It doesn't break a joint tenancy. Under 58 O.S. §1256, if two people own the house as joint tenants with survivorship, the TOD deed only takes effect if the person who signed it is the last owner to die.

When to talk to an estate-planning attorney

Talk to an Oklahoma estate-planning attorney if:

• You're thinking about a TOD deed for your home or a parent's home.
• A parent is on Medicaid, or may need long-term care soon.
• The family is blended, or you want to treat children differently.
• A power of attorney was used to sign any deed.
• A parent has died and a TOD deed names you. The nine-month clock is running.

An attorney prepares the deed. We don't. Where we help is the house itself. If a TOD deed passes a house to your family and you decide to sell, Bucky can list it as a licensed Oklahoma Realtor through Waypoint Realty, or KRE Group can make a direct as-is offer. Either way, you can see what each option would net first, and you are always free to list with any agent or take other offers. Questions? Call or text (918) 317-2874.