Effective October 1, 2026, Maryland joined other states in enacting the Transfer-on-Death Deed Act. This can be a powerful estate planning tool; however, there are risks that Maryland landowners should consider before executing.
The Maryland Transfer-on-Death Deed Act makes it easier for Maryland landowners to fill out a simple Transfer-on-Death Deed to designate beneficiaries to automatically inherit property without the necessity of going through probate. However, just because a form exists for convenience does not automatically mean it’s a good idea to utilize it.
What is a Transfer-on-Death Deed?
A Transfer-on-Death Deed allows a landowner to name one or more beneficiaries upon the death of the current landowner. Once recorded, if the landowner dies, the beneficiary or beneficiaries become the owners of the property.
The goal is simple: you name your beneficiary on the Transfer-on-Death Deed. The property is transferred to the beneficiaries without going through probate by filing a Notice of Death of Transferor. You don’t need to write it up in your Will or Trust. You don’t need an Executor to be appointed. The property just transfers to your beneficiaries.
For some landowners, this may be welcome news. You can just use online forms to designate who you want to get your real property. However, there can be unforeseen consequences.
Common Problems with Transfer-on-Death Deeds
Having practiced in jurisdictions with Transfer-on-Death Deeds, these types of deeds tend to create further complications in the probate process and property disputes.
Some common pitfalls are:
- The beneficiaries may disagree on whether to keep or sell the property. This usually results in a higher volume of partition actions in which beneficiaries sue other beneficiaries to sell the property.
- The beneficiaries are now responsible for paying property taxes, utilities, maintenance, and other costs associated with maintaining the property.
- If the property has a mortgage or other liens, the beneficiaries are now responsible for paying these debts as well.
- The landowner had other debts that cannot be paid by the Estate. The burden of paying for a decedent’s estate may now fall to the beneficiaries.
- If the beneficiaries are not exempt from inheritance or death taxes, the beneficiaries will be assessed taxes upon filing the Notice of Death of Transferor. If there are no funds in the Estate, the beneficiaries are directly responsible for paying these taxes.
- If a co-owner executes a Transfer-on-Death Deed without the approval of the other co-owners, you have now created a more complicated co-ownership structure for the property.
- If there are multiple beneficiaries, disputes can arise over who gets use and possession of the property.
Overall, these Transfer-on-Death Deeds can lead to more foreclosures, tax lien sales, partition actions, and other tax implications.
When Can a Transfer-on-Death Deed be Used?
I have heard some interesting requests in the past regarding utilizing Transfer-on-Death Deeds; however, these types of deeds are used for limited purposes:
- The landowner must be a natural person! You cannot use a Transfer-on-Death Deed if you hold the property through an LLC, Trust, or other business organization.
- The beneficiaries must also be natural persons! You cannot transfer these types of properties to a trust, business, or charity.
- You have to execute and record the deed during the transferor’s lifetime. If not, the deed can be considered invalid.
- If you have a mortgage on the property, the Act permits the recordation; however, your lender may require the beneficiaries to assume the mortgage.
- If you have multiple co-owners, you should consult with your co-owners and determine whether you agree on the designated beneficiaries as a best practice to avoid future conflicts. However, technically, you are not required to seek co-owners’ approval.
Best Case Scenarios for a Transfer-on-Death Deed
In my experience, the only time a Transfer-on-Death Deed works is under the following circumstances:
- There is one landowner who designates one beneficiary for the property.
- The beneficiary is exempt from inheritance and estate taxes.
- The property does not have any mortgages or liens.
- The beneficiary is aware of the Transfer-on-Death Deed and is financially able to handle paying the property taxes, utilities, and maintenance for the property.
- The landowner has paid off all debts or has other means to pay off all debts before death, so the beneficiary does not have to sell the property to pay Estate debts.
- Normally, the beneficiary is a spouse or only child of the transferring landowner, so there will not be a dispute about beneficiary distributions.
If you do not have those scenarios, you are more likely looking at creating a future legal case that your beneficiaries will have to litigate or resolve.
Alternatives to the Transfer-on-Death Deed.
If you are truly trying to avoid probate, a Transfer-on-Death Deed, while a powerful tool, is not always the best solution. Alternatives to the Transfer-on-Death Deed typically are:
- Revocable Trusts: Placing the property in trust with other assets to fund the property taxes, maintenance, utilities, and other costs of the property allows landowners to give instructions to their successor trustee on how to manage the property and how to pay for expenses. The Trust can also outline how to utilize the property.
- Life Estate Deeds: You can give yourself a life estate on the property and designate a trust or family LLC as the remainderman of the property. This allows you to have control over the property and designate a successor to the property.
- Joint Tenancy Agreements: If you truly want a beneficiary to automatically inherit property without probate, you can create a joint tenancy deed and execute a joint tenancy agreement with other co-owners where you agree on how the property will be handled during your lifetime and how property costs will be handled after your death.
Again, these alternatives may still be subject to other gift taxes, property transfer and recordation taxes, etc.
Can I Revoke my Transfer-on-Death Deed?
Generally, yes, you can revoke your Transfer-on-Death Deed so long as the original Transfer-on-Death Deed specifically reserves the power to revoke. However, you would need to execute and record a revocation of the Transfer-on-Death Deed. Executing a Will or transferring the property to a trust will not revoke the previous Transfer-on-Death Deed.
How Can a Beneficiary Get Out of a Transfer-on-Death Deed?
If you have been named as a beneficiary to a Transfer-on-Death Deed and do not want to become the owner, you have some options:
- You can disclaim your interest; however, you do forfeit your rights to the property.
- You could take the interest and transfer it to the decedent’s Estate if you would inherit that way; however, again, more complications can arise from this.
- You could seek a judicial partition of the land if you just want to sell the land and other beneficiaries want to keep the property. Again, this can be time-consuming.
Is a Transfer-on-Death Deed Right for You?
Transfer-on-Death Deeds can be useful in limited circumstances; however, they only work if everyone is in agreement that the property should automatically transfer and the beneficiary(ies) can already afford the property costs and can work together. Otherwise, Transfer-on-Death Deeds can create more problems down the line.
If you are considering executing a Transfer-on-Death Deed, you should consult legal counsel prior to executing one. You may not have considered all the implications.
Our Trusts and Estates Team and Joseph, Greenwald & Laake can advise you on your options for transferring property given your particular circumstances.
