Understanding Transfer on Death Deeds in Wisconsin
A Transfer on Death Deed can be a useful estate planning tool for Wisconsin homeowners who want to determine who will receive their real estate after death without transferring ownership during their lifetime. Unlike a traditional deed, a Transfer on Death Deed does not give the beneficiary an immediate ownership interest in the property. Instead, the transfer takes effect when the owner dies, provided the legal requirements are satisfied.
We previously discussed Transfer on Death as part of our comparison of a Living Trust vs Transfer-on-Death Deed Wisconsin for Wisconsin homeowners. This article takes a closer look at the Transfer on Death option itself, including how it works, what the document must contain, what happens after the owner’s death, and mistakes homeowners should avoid.
What Is a Transfer on Death Deed in Wisconsin?
A Transfer on Death Deed, or TOD deed, allows a Wisconsin property owner to name who will receive their real estate after they die.
The key benefit is that you keep full ownership and control of the property during your lifetime. You can continue living in the home, sell it, refinance it, or make other decisions about the property.
The beneficiary does not receive ownership rights while you are alive. The transfer takes effect only after your death and, when properly arranged, can allow the property to pass outside of probate.
How Does a Transfer on Death Deed Work?
The process may look simple, but the details matter.
Generally, a homeowner identifies the real property and names the person or people who should receive it after death. The Transfer on Death designation must comply with Wisconsin law and be recorded with the appropriate county Register of Deeds before the owner’s death.
A Transfer on Death arrangement generally works in three stages:
1. The Owner Names a Beneficiary
The property owner designates one or more people or entities to receive the property after death. The beneficiary can be any person or eligible entity.
Wisconsin law permits both primary and contingent TOD beneficiaries. A contingent beneficiary can receive the property if a primary beneficiary does not survive the owner.
2. The Designation Is Properly Recorded
A TOD designation is not effective simply because the owner has signed a document.
Wisconsin law requires the document containing the designation to be submitted for recording in the county where the real property is located before the death of the sole owner or the last surviving owner.
This is one of the most important practical details for homeowners to understand.
A document sitting in a desk drawer is not the same as a properly recorded TOD designation.
3. The Transfer Takes Effect After Death
The owner retains the property during life. After death, the designated beneficiary can take the necessary steps to establish the transfer of the deceased owner’s interest.
The Wisconsin Department of Revenue recognizes the Transfer on Death process as a nonprobate transfer of real property under Wisconsin Statute § 705.15.
That means the property can pass outside the traditional probate process when the statutory requirements are satisfied.
What Must a Wisconsin Transfer on Death Designation Include?
Wisconsin law establishes specific requirements for a TOD beneficiary designation.
Among other things, the document must include:
- The name of the owner or owners of the real property
- The name of the designated TOD beneficiary
- A statement that the transfer becomes effective only upon the owner’s death
- The signatures of both spouses if the property is owned as marital property
The TOD designation must also be recorded with the county Register of Deeds before the owner’s death to be effective. Wisconsin law allows owners to name both primary and contingent beneficiaries, providing an additional layer of planning if a primary beneficiary does not survive the owner.
Can You Name More Than One Transfer on Death Beneficiary?
Yes. A homeowner may designate more than one beneficiary.
For example, a parent might want a home to pass to two adult children after death.
However, simply naming multiple beneficiaries does not answer every question that could arise later.
Families may still need to consider:
- What happens if one beneficiary dies first?
- Should there be a contingent beneficiary?
- How will multiple beneficiaries handle the property?
- Will they want to sell the property or keep it?
- What happens if the beneficiaries disagree?
- Are there other assets that should be coordinated with the property?
This is one reason a Transfer on Death designation should be considered as part of the owner’s broader estate plan rather than viewed as an isolated form.
Can You Change or Revoke a Transfer on Death Designation?
Estate plans often change as families and circumstances change.
A homeowner may decide to change a beneficiary after a marriage, divorce, birth of a child, death of a beneficiary, change in family relationships, or other significant life event.
Wisconsin law provides mechanisms for changing or revoking a TOD designation. The specific requirements depend on the circumstances and the documents involved.
Recent Wisconsin legislation also addressed procedures involving revocation of transfers of real property on death and evidence of termination of a decedent’s property interest.
Because a TOD designation affects real property ownership, homeowners should not assume that simply writing a new will automatically changes an existing TOD designation.
Does a Transfer on Death Deed Override a Will?
This is an important estate planning question, especially if your will and Transfer on Death designation name different beneficiaries.
For the real property covered by a valid TOD designation, the TOD designation generally controls who receives the property – not the will. The property passes directly to the designated TOD beneficiary outside of probate, while a will generally controls assets that are part of the probate estate. Wisconsin law specifically provides for real property to pass to the designated TOD beneficiary upon the owner’s death.
For example, if your will says that your home should go to your two children, but a valid TOD designation names only one child as the beneficiary, the TOD designation generally determines who receives that property.
This does not mean that a TOD designation replaces your will. Your will may still control other assets that pass through probate.
The important point is that these documents should be coordinated. If you create or change a TOD designation, review your will, trust, and other estate planning documents at the same time to make sure they reflect your current wishes.
If you want to change who receives the property, changing the will alone is not enough. Wisconsin law allows a TOD designation to be changed or canceled by recording the appropriate document before the owner’s death.
What Happens to the Mortgage After a Transfer on Death?
A Transfer on Death does not simply make financial obligations attached to the property disappear.
The beneficiary receives the deceased owner’s interest in the real property subject to applicable obligations and claims associated with the property. For example, a mortgage or other lien may continue to affect the property after the owner’s death.
Wisconsin Law Help notes that property transferred through a TOD deed can remain subject to unpaid mortgages, taxes, or judgment liens.
This is an important consideration for anyone thinking about using a TOD designation for a home with significant debt or other obligations.
The beneficiary may receive the property, but that does not necessarily mean the property is free and clear of financial responsibilities.
What Happens After the Property Owner Dies?
After the property owner dies, the beneficiary must take steps to document the transfer of ownership with the county Register of Deeds. The required documents may vary depending on the circumstances, but can include a Termination of Decedent’s Interest form, a Real Estate Transfer Return, and documentation of the recorded TOD designation.
A Transfer on Death designation can help the property avoid probate, but the beneficiary still needs to properly document the change in ownership.
Common Transfer on Death Mistakes to Avoid
A TOD designation can be useful, but mistakes can undermine the intended result.
➤ Failing to Record the Document
One of the most significant problems is failing to properly record the TOD designation before the owner’s death.
Wisconsin law specifically requires the designation to be recorded before the death of the sole owner or the last surviving owner.
➤ Naming Only One Beneficiary Without a Backup Plan
If the named beneficiary dies before the property owner, the result may not be what the owner expected.
Naming appropriate contingent beneficiaries can help address this possibility.
➤ Forgetting About Other Estate Planning Documents
A TOD designation does not replace every other estate planning document.
A homeowner may still need a will, powers of attorney, health care planning, trusts, or other documents depending on their circumstances.
➤ Failing to Update the Designation
A designation created years ago may no longer match the owner’s wishes.
Major life changes are a good reason to review the entire estate plan – not just the TOD document.
➤ Treating the TOD Deed as a Complete Estate Plan
A Transfer on Death designation generally addresses a particular real property interest. It does not automatically address bank accounts, investments, personal property, business interests, incapacity, health care decisions, or other estate planning concerns.
When Should a Transfer on Death Beneficiary Take Action?
After the property owner dies, the named beneficiary should begin the process of documenting the transfer of the property rather than assuming ownership happens automatically.
There is generally no need to wait for a probate proceeding because a properly recorded TOD designation allows the property to pass outside probate. However, the beneficiary still needs to complete the required documentation to establish the transfer with the county Register of Deeds.
The beneficiary should generally:
- Obtain the owner’s death certificate
- Confirm that the TOD designation was properly recorded
- Complete the required documents for the transfer
- File the necessary documents with the county Register of Deeds
It is best to address the transfer promptly after the owner’s death, particularly before selling, refinancing, or otherwise transferring the property.
Get Guidance Before Choosing a Transfer on Death Strategy
For Wisconsin homeowners, a Transfer on Death Deed can offer a straightforward way to designate who should receive real estate after death while allowing the owner to retain control during life. But the document must be properly prepared, recorded, and coordinated with the rest of the estate plan.
Horn & Johnsen S.C. helps individuals and families in Madison and throughout Southern Wisconsin with estate planning, living trusts, wills, probate, guardianship, Medicaid planning, and other strategies designed to protect people and property.
Plan Your Property Transfer With Confidence
Your home may be one of your most important assets, and deciding who receives it should be part of a thoughtful estate plan. Whether you are considering a Transfer on Death designation, reviewing an existing estate plan, or looking for a broader strategy for your family, the attorneys at Horn & Johnsen S.C. can help you understand your options.
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Take the time to review how your real estate fits into your overall estate plan today. The right planning can help reduce uncertainty and make your wishes clearer for the people you leave behind.
