Traps for Transfer on Death Property

Transfer on death (TOD) designations are widely used estate-planning tools to avoid probate. Nevertheless, practitioners may overlook an important insurance coverage issue for TOD beneficiaries. A recent Minnesota appellate court case highlights that a TOD beneficiary typically has no coverage under the owner’s insurance policies. This poses a risk to the inheritor because the TOD beneficiary becomes the owner of the property as of the prior owner’s death. Practitioners should be aware of the practical implications of using TOD designations and the advance planning they can undertake with their clients to ensure uninterrupted coverage.

Deceivingly Simple

A TOD designation allows an owner to title property so that, at their death, such prop…