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Transfer-on-Death Deed: Selling Property You Inherited Through a TOD Deed

A transfer-on-death (TOD) deed — also called a beneficiary deed in some states — is a deed that names a beneficiary who automatically receives the property when the owner (the grantor) dies. Like joint tenancy, it avoids probate entirely. Unlike joint tenancy, the beneficiary has no ownership rights during the grantor’s lifetime — the grantor can sell, refinance, or revoke the TOD deed without the beneficiary’s consent. At the grantor’s death, the beneficiary records the required documents and takes title immediately. OLH assists TOD beneficiaries in selling inherited property across all 50 states.

How TOD Deeds Work

The grantor records a TOD deed during their lifetime, naming one or more beneficiaries. The deed has no effect during the grantor’s life — the grantor retains full ownership, can sell or refinance, and can revoke or change the TOD deed at any time. At the grantor’s death: (1) The beneficiary files an Affidavit of Death (or similar document per state requirements) and a certified death certificate with the county recorder. (2) Title passes to the beneficiary. (3) The beneficiary can then sell, refinance, or retain the property. No probate. No executor. No court. The beneficiary should work with a real estate attorney to confirm the recording before listing with OLH.

States That Allow TOD Deeds

TOD deeds are available in most US states. States that currently allow TOD deeds include: Alaska, Arizona, Arkansas, California, Colorado, DC, Hawaii, Illinois, Indiana, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, Wyoming (and others — this list changes as states adopt new legislation). States that do NOT allow TOD deeds typically include: Connecticut, Delaware, Florida (uses Lady Bird deeds instead), Georgia, Kentucky, Louisiana, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Tennessee.

Tax Treatment of Inherited Property via TOD Deed

A beneficiary who receives property through a TOD deed generally receives a stepped-up tax basis equal to the property’s fair market value on the date of the grantor’s death. This is one of the most important financial benefits of inheriting property — it means the beneficiary pays capital gains only on appreciation after the date of death, not on the entire gain during the grantor’s lifetime. Example: grantor bought the property for $200,000. At death, it is worth $600,000. The beneficiary’s basis is $600,000. If the beneficiary sells shortly after for $620,000, the taxable gain is only $20,000, not $420,000. See: Step-Up in Basis Explained.

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Frequently Asked Questions

What is a transfer-on-death deed?

A TOD deed (also called a beneficiary deed) names a beneficiary who automatically receives real property when the owner dies, without probate. The beneficiary has no ownership rights during the owner’s lifetime. At death, the beneficiary records an affidavit and death certificate to receive clear title.

Do all states allow transfer-on-death deeds?

No. TOD deeds are available in most but not all US states. States that do not allow TOD deeds typically require other methods to avoid probate (living trusts, joint tenancy, or Lady Bird deeds in Florida). Verify availability in the property’s state with a real estate attorney.

What tax basis does a TOD beneficiary receive?

A TOD beneficiary generally receives a stepped-up basis equal to the property’s fair market value on the date of the grantor’s death. This minimizes capital gains on appreciation that occurred during the grantor’s lifetime. See Step-Up in Basis Guide for a complete explanation. Consult a CPA before making tax-related decisions.