On July 1, 2024, new laws took effect in Georgia, allowing for real estate to potentially pass to your chosen beneficiaries via a “Transfer-on-Death” (TOD) deed. These laws are found in the Official Code of Georgia Annotated (O.C.G.A.) 44-17-1 through 44-17-7.  This means when using a TOD deed, it may be possible for real estate to pass to beneficiaries named in the TOD deed upon the death of the owner(s) without the need for such real estate to go through the probate process.

In some cases, people list beneficiaries on bank accounts and financial accounts, and those assets pass to those beneficiaries outside of a will or trust, and outside of the probate court process.  A TOD deed for real estate can potentially work the same way. This means, given the right circumstances, it is possible for a person's assets, or most of them, to avoid the probate process without using a living trust. Living trusts are still very good tools, but the TOD deed now adds another tool to our toolbox.

To properly execute a TOD deed, the owner(s) of the property sign a deed designating a beneficiary or beneficiaries, and record the deed with the Clerk of Superior Court in the county where the property is located. The TOD deed must be witnessed and notarized like other deeds.  Importantly, the beneficiary (or beneficiaries) listed on the TOD deed do not need to sign or otherwise accept the deed in any way while the owners are alive. The owner(s) of the property retain full ownership of the property and control over it. The owner(s) may revoke the designation at any time. A revocation can occur either by the designation of a new beneficiary in a subsequent deed, by the execution of an affidavit done in compliance with the law that revokes the designation which is also filed with the county land records, or by the transfer of the entire property to another person during the owner's life. Additionally, if a beneficiary predeceases the owner, the beneficiary's death revokes the designation as to that beneficiary.

Importantly, making a provision in your Will for the disposition of real estate that is held under a TOD deed does not revoke the beneficiary designation of the TOD deed.  In other words, as long as the TOD deed is not revoked (in the ways discussed above) the TOD deed controls where your property goes at your death. Therefore, a valid TOD deed overrides any Will provisions for that property.

Upon the death of the owner (or the surviving joint owner, if the property was held as Joint Tenants with Rights of Survivorship), the beneficiaries must claim the property by executing an affidavit. The affidavit must do three things: it must affirm the death of the owner, note whether the beneficiary was or was not the spouse of the owner, and provide the legal description of the property. The beneficiary (or beneficiaries) must file the affidavit with the clerk of the Superior court within 9 months of the owners death, and a copy of the owner's death certificate must be attached to the affidavit as well. If this affidavit and supporting documents are not timely filed with the Superior court, the TOD provisions become ineffective and the property reverts to the owner's estate. This is why we note that a TOD deed can be used to potentially avoid probate - if the beneficiary (or beneficiaries) of the TOD deed do not claim the property by recording the required affidavit and paperwork on a timely basis, the property will revert to the owner's estate, and then a probate proceeding will be necessary. 

The beneficiary, upon the recording of the affidavit, takes title to the property subject to any mortgage, liens, or transfers of record. So, if there is a mortgage on the house, or other liens, etc., those do not disappear or become ineffective because the owner of the property has died.

For those that are curious about how this legislation came to pass, here's a little inside look at the legislative history in the Georgia legislature during the 2024 general assembly:

In the State House, House Bill 1247 (HB 1247) provided for TOD deeds.  It passed the House, unanimously though a few members did not vote or were excused. The bill was transferred then to the State Senate, and was then substituted by the Senate to an immigration status bill.  The Senate substitute stripped all TOD deed language from the bill and sought to add a new code section to title 42 that said, “The immigration status or citizenship of an inmate shall not be the sole basis for  granting an application for pardon or parole."  The bill then died in the Senate. 

Meanwhile, in the State Senate, Senate Bill 420 (SB 420) initially dealt primarily with agriculture provisions and whether nonresident aliens and agents of foreign governments can hold an interest in agricultural land or land within a 10 mile radius of any military base in Georgia.  SB420 at its outset contained no TOD deed provisions. When it passed the Senate there were no TOD deed provisions. It then crossed to the House.  It was substituted somewhat and passed by the House Judiciary committee.  There were no TOD deed provisions added by that committee at that time. Later, the House Rules committee considered the bill and substituted it again – this time tacking on the TOD deed provisions that had originally been in HB 1247.  The full bill, TOD deed provisions and all, passed a vote in the House and the Senate agreed to the substitute.  Governor Kemp then signed the revised bill, and the new laws regarding TOD deeds became effective July 1, 2024, with virtually no fanfare.

The bottom line is that these TOD deed laws is a very good piece of legislation that can help many families potentially avoid a lengthy probate process when a loved one dies. But, caution must be taken to ensure that any TOD deed is done in coordination with your overall estate plan. For some people a TOD deed may be a great tool and something that makes sense.  But for some others, different planning tools might be better based on their goals. Whether a TOD deed is right for your situation is a good topic for discussion with your estate planning lawyer at Peach State Wills & Trusts.