On July 1, 2014, South Dakota enacted the Real Property Transfer on Death Act, which provides for the transfer of real property in the event of death.
“TOD” (transfer on death) and “POD” (pay on death) account designations have been offered by banks and investment firms for decades. In a TOD account, the TOD account owner specifies recipients to receive the account after the account owner dies. The owner can change the TOD recipients at any time, and the recipients have no rights to ownership of the account during the owner’s life. These statutes made it easy for owners to set up accounts with banks and investment firms to pass assets onto beneficiaries, without the asset going through the probate process.
Because of the Real Property Transfer on Death Act (“the Act”), South Dakotans can also pass their real estate onto beneficiaries, without the real estate going through the probate process. The Act allows for non-probate transfer of land in South Dakota like a TOD or POD on an account. The owner of real property creates and records a Transfer on Death Deed, which specifies the recipient to receive the real estate on the owner’s death. The Transfer on Death Deed is designed to pass property to a recipient directly, avoiding the probate process, but the property is still subject to claims by the deceased person’s creditors. South Dakotans were already taking advantage of non-probate transfers for their accounts and other assets. The state realized there was a need for a non-probate transfer of real estate as well, hence the state enacted the Act. A Transfer on Death Deed allows an alternate option for those who wish to pass their real estate directly without it going through probate. Contact your Estate Planning attorney today to discuss whether a Transfer on Death Deed is right for you.