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There seems to be a common misconception that adding a Transfer on Death (TOD) designation (also known as a beneficiary designation) to assets will cure all concerns at death. For the majority of families, this is not an accurate belief. While a TOD may avoid Probate, it does not solve all family concerns at death.

Although a transfer on death deed appears to have simplicity, there are many shortcomings. The first of which is that, if the named beneficiary dies before the property owner does, the deed becomes invalid. The property could then fall into probate upon the owner's death.

A beneficiary form states who will directly inherit the asset at your death. Under a TOD arrangement, you keep full control of the asset during your lifetime and pay taxes on any income the asset generates as you own it outright. TOD arrangements require minimal paperwork to establish.

TOD Accounts FAQs Not all assets can be transferred through a TOD account. ... TOD accounts offer several benefits, including the avoidance of probate, the privacy of asset transfer, flexibility in asset management, and cost savings compared to traditional estate planning methods.

In some states, such as California, multiple beneficiaries on TOD deeds can't inherit unequal property shares, and you can't name a backup beneficiary. In addition, your estate plan may be too complex for a TOD deed if you have multiple children to whom you'd like to pass property.

If you want to transfer real estate in Illinois to a relative or a friend, you might consider doing this yourself by using a quitclaim deed. A quitclaim deed in Illinois is often used to transfer property between close family members or trusted friends.

Trusts Can Plan for Incapacity If you anticipate or worry about becoming incapacitated, you might want to opt for a living trust. Unlike a TOD deed, a living trust can name a successor trustee to take care of the trust property if you become incapacitated.

A Maryland deed must be filed with the clerk of the circuit court for the county where the real estate is located. Attorney Practice Note: Maryland law often requires deeds that change the property's ownership to be processed through the county's property tax office before filing with the clerk.