Transfer on Death Deeds in New York

LEGAL BRIEFING: TRUSTS & ESTATES

PULLANO & FARROW

Transfer on Death Deeds in New York

A Simple Probate-Avoidance Tool with Unsettled Practical Concerns

LEGAL BRIEFING • SEPTEMBER 2026

At a glance: New York now permits real estate to pass at death through a Transfer on Death Deed. Although the deed may avoid probate, the statute is new and title insurers may require extensive documentation before insuring a later sale by the beneficiary. As a result, a traditional Living Trust may remain a more established and predictable probate-avoidance method for many clients.

A New Probate-Avoidance Option

Effective July 19, 2024, New York Real Property Law § 424 authorizes a property owner to execute and record a Transfer on Death Deed, commonly called a “TOD Deed.” The deed identifies one or more beneficiaries who will receive the owner’s interest in the property at death.

During the owner’s lifetime, the owner retains control of the property. The beneficiary has no present ownership interest, and the owner may sell, mortgage, or revoke the TOD Deed. If the statutory requirements are satisfied and the deed is recorded before death, the transfer occurs outside probate.

Why TOD Deeds Are Attractive

·  The deed can be less expensive and simpler to implement than a trust-based estate plan.

·  The owner retains full control during life.

·  The beneficiary’s consent is not required during the owner’s lifetime.

·  The property can pass at death without a probate proceeding solely to transfer the real estate.

For a straightforward estate involving a residence and an uncomplicated beneficiary designation, these features can make a TOD Deed appealing. However, avoiding probate does not necessarily eliminate post-death legal or title issues.

Potential Post-Death Concerns

Creditor Claims and the 18-Month Exposure Period

RPL § 424 contains a statutory mechanism that may expose TOD property, or its value, to claims when the deceased owner’s probate estate is insufficient. The statute generally places responsibility on the decedent’s Executor to seek recovery from a TOD beneficiary and imposes an 18-month limitation period measured from the transferor’s death. As a practical matter, a title insurer may require sale proceeds to remain in escrow for as long as 18 months after the transferor’s death while the potential claim period remains open.

Because the statute is new, important practical questions remain. For example, uncertainty may arise when no probate estate is opened because all assets pass outside probate, but a creditor nevertheless asserts a claim. A creditor may attempt to commence an estate proceeding so that a fiduciary can pursue the statutory remedy, potentially including the value of the TOD property.

Medicaid Estate-Recovery Questions

New York Medicaid estate recovery has traditionally focused on assets passing through the recipient’s probate estate. A TOD Deed is expressly nontestamentary and transfers the property outside probate. Nevertheless, the creditor-recovery language in RPL § 424 has created uncertainty about whether, and through what procedure, a Medicaid recovery claim might affect TOD property.

Until courts, regulators, or the Legislature provide greater clarity, a TOD Deed should not be treated as a Medicaid asset-protection technique. Clients whose principal goal is protection from long-term-care costs require separate elder-law planning, such as Irrevocable Living Trusts.

Title Insurance and the Beneficiary’s Later Sale

The most immediate practical concern may arise when the beneficiary later sells or refinances the property. Because title insurers must evaluate possible post-death claims, some underwriters are considering requirements that go well beyond producing the recorded TOD Deed and a death certificate.

Depending on the facts and the title insurer, requested materials may include:

·        Evidence of whether the decedent died testate or intestate (i.e. with or without a Will);

·        A copy of the Will, probate papers, waivers, or an affidavit identifying heirs;

·        Judgment, lien, and bankruptcy searches involving heirs;

·        The decedent’s residential and long-term-care history;

·        Information concerning Medicaid benefits;

·        Proof of the value and sufficiency of the decedent’s estate;

·        An escrow of sale proceeds during the potential claim period, potentially lasting up to 18 months after the owner’s death; and

·        An indemnification agreement protecting the title insurer against future claims.

These are underwriting requirements, not statutory prerequisites for the TOD transfer itself. Even so, they may delay a closing, increase legal and title costs, restrict access to sale proceeds, and reduce the practical simplicity that initially made the TOD Deed attractive. Of particular concern, an 18-month escrow could prevent the beneficiary from accessing some or all of the sale proceeds for up to a year and a half after the parent’s death.

How a Revocable Living Trust Compares

A Revocable Living Trust is a more established method of avoiding probate. The owner transfers the property to the trust during life, ordinarily serves as trustee while competent, and names a successor trustee to act after death or incapacity. When properly funded, the trust may hold real estate together with bank, investment, and other assets under one coordinated plan.

Issue	Transfer on Death Deed	Revocable Living Trust
Up-front work	A deed must be properly executed and recorded.	A trust agreement must be prepared, and assets must be retitled to the trust.
Control during life	Owner retains control and may revoke the TOD Deed.	Grantor generally retains control and may amend or revoke the trust.
Scope	Applies only to the real property identified in the deed.	Can coordinate real estate and other assets transferred to the trust.
After death	Title passes to the named beneficiary, but title underwriting and creditor questions may arise.	Successor trustee administers and transfers or sells trust property under established trust procedures.
Title practice	New in New York, with developing underwriting standards.	Long-established and generally familiar to title companies and financial institutions.
Cost and administration	Usually lower initial cost, but post-death clearance may be burdensome.	Higher initial cost and requires proper funding but may offer greater post-death predictability.

Which Method Is Better?

There is no single answer. A TOD Deed may remain appropriate when the client seeks a limited, low-cost method of transferring a particular parcel to clearly identified beneficiaries and accepts the possibility of developing title requirements after death.

A Living Trust may be preferable when the client wants a comprehensive plan, owns multiple assets, is concerned about incapacity, expects the property to be sold promptly after death, or places a premium on predictable administration and established title practice.

Practical Planning Considerations

·       Do not select a TOD Deed solely because it appears less expensive at the planning stage.

·        Consider whether the beneficiary is likely to sell or refinance soon after the owner’s death.

·        Review the owner’s potential creditor exposure and long-term-care planning objectives.

·        Coordinate the deed with the owner’s Will, trust documents, beneficiary designations, and overall dispositive plan.

·        Recognize that a TOD Deed does not replace incapacity planning or provide centralized management of other assets.

·        Revisit the plan as New York courts and title insurers develop standards under RPL § 424.

Conclusion

Transfer on Death Deeds are a useful addition to New York estate planning, but their apparent simplicity should be weighed against unresolved creditor, Medicaid, and title-insurance concerns. In some cases, the beneficiary may avoid probate only to face substantial documentation, long escrow periods, or indemnification requirements when the property is later sold.

For clients who want a well-established and comprehensive probate-avoidance plan, a properly drafted and funded Revocable Living Trust may remain the more predictable option. The appropriate choice depends on the client’s assets, family circumstances, anticipated post-death administration, and broader estate-planning objectives. Most parents undertake estate planning to make matters easier for their children. They may not want a child who inherits and sells the home to be subject to estate creditor and face the possibility of waiting up to 18 months to receive the sale proceeds.

Questions?

Please contact the Estate Planning Department at Law Offices of Pullano & Farrow PLLC at (585) 730-4773 or visit lawpf.com.

This Legal Briefing is intended for general informational and educational purposes only and should not be considered legal advice or counsel. The substance of this Legal Briefing is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to determine how these developments may relate to you or your estate plan.

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