Maryland’s New TOD Deed — Read the Label
Maryland's new transfer-on-death deed passes your house to someone at death, no probate. One form. Sign, notarize, record. Done.
Then you read the form.
Own the property with someone else? Changed your name? Leaving it to more than one person? The legislature says a lawyer is "strongly advised," because the form "may have unintended consequences." (Read Warning Here)
Side effects may include: three siblings co-owning a house they can't agree on. A stroke that leaves no one able to pay the mortgage. A new will that doesn't change the deed. A 17-year-old inheriting a house outright.
Yes, a lawyer is pointing this out, I know. But I didn't write the warning. The General Assembly did, and I couldn't have said it better myself.
The TOD deed is a good tool, and we'll use it. But it has revived an old shortcut: TOD on the house, POD on the bank accounts, beneficiaries on everything else. No will, no trust, no lawyer.
A TOD/POD answers one question well. But does it accomplish YOUR goals?
| What Is Your Goal? | TOD / POD / beneficiary forms | A will alone | A coordinated plan |
|---|---|---|---|
| Pass a specific asset at death | ✔︎ | ✔︎(requires probate) | ✔︎ |
| Keep that asset out of probate | ✔︎ | ✘︎ | ✔︎ |
| Let someone you trust act if you're incapacitated | ✘︎ | ✘︎ | ✔︎ |
| Name who is in charge after you die | ✘︎ | ✔︎(requires probate) | ✔︎ |
| Hold an inheritance for a minor or a beneficiary on public benefits | ✘︎ | ? | ✔︎ |
| Protect an inheritance from a child's divorce or creditors | ✘︎ | ? | ✔︎ |
| Tell co-inheriting children what to do with a shared house | ✘︎ | ? | ✔︎ |
| Make every deed, account, and policy tell the same story | ✘︎ | ✘︎ | ✔︎ |
| Keep it current as life changes | Only if you remember | Only if you remember | Built into our process |
Where the gaps show up
Three kids, one house. Mom's TOD deed leaves the house to her three children. No probate. Now one wants to sell, one wants to keep it, and one lives there. Who pays the taxes? Fixes the roof? If they can't agree, the answer is a lawsuit.
And unless the deed says otherwise, they own it as joint tenants with survivorship. If one dies before it sells, her share goes to her siblings, not her own children. Most owners have never been asked whether that's what they want.
The stroke before the death. A TOD deed does nothing while you're alive. If you can't manage your affairs, someone still has to pay the mortgage or sell the house to pay for care. Without a power of attorney or a funded trust, that means a court-appointed guardian. No court at death; a court during life.
"Give it to them" vs. "hold it for them." A TOD deed hands property over outright. Fine for a settled adult. A problem for a minor, someone on SSI or Medicaid, someone mid-divorce or facing creditors, or someone who just isn't ready. A trust can hold it for them instead. A TOD form never asks the question.
TOD everything. House, bank accounts, brokerage, 401(k), IRA, life insurance, each with its own form. Each can be valid. Together they drift: balances change, a beneficiary dies, the "equal" split isn't, and nobody has the authority or the cash to pay the final bills. Several working transfers. No plan.
The Maryland fine print
• Your will can't fix it. Only another recorded document can change a recorded TOD deed. A later will doesn't touch it.
• Life events can cancel it. Divorce revokes a TOD deed to an ex-spouse. Remarrying and having a child can revoke it entirely.
• It doesn't avoid inheritance tax. The statute says so.
• It can be contested. Same capacity standard as a will.
Start with your goals
People call and ask, "How much for a ______?" My answer is always, "What are your goals?"
If the goal is simply "this house goes to this person," a TOD deed may be enough. We'll tell you so. If it's anything more (incapacity, protecting a child, a blended family, keeping siblings out of court), you need a plan, not a form.
The goal isn't to use, or avoid, any particular document. It's a plan that works for you and the people you leave behind.
Read the label. Then ask your lawyer if a TOD deed is right for you. Schedule a call if you have questions.
