by Allison L. Byrd, Morgan & DiSalvo, P.C.

In Georgia, there are many ways to transfer your assets at your death to your intended beneficiaries. Wills and Trusts are probably the best-known tools for estate planning, but there are other ways to transfer property directly to beneficiaries. For instance, owning an account or a parcel of real estate jointly, with one or more other owners, as joint tenants with rights of survivorship (also called simply, “joint tenants”) allows the property interest of a deceased joint tenant to transfer automatically to the surviving joint tenant or tenants. Another way to transfer property directly is to use well-crafted beneficiary designations on certain financial accounts such as individual retirement accounts (“IRAs”) and 401(k) accounts. Still another transfer method involves the use of pay-on-death (“POD”) payee designations[1] on certain accounts or transfer-on-death (“TOD”) beneficiary registrations[2] on securities and security accounts. In a few states, there is even an option to use TOD deeds to transfer real estate at the death of the current owner to a beneficiary that is named on the deed, while still allowing the current owner to retain full control and ownership over the property during that owner’s lifetime, including the right to change or remove the named beneficiary. Such deeds are sometimes called “Lady Bird” deeds.[3]

Until recently, Georgia law appeared to offer no option to transfer real estate using a transfer-on-death or “TOD” deed, but new Georgia laws that went into effect on July 1, 2024, now allow the use of such deeds to transfer an interest in real estate to one or more designated grantee beneficiaries (called “DGBs” for the rest of this article) in a way that is fully revocable during the current record owner’s lifetime, and that grants no rights to the DGB until after the record owner’s death.[4] This new tool in the estate planning toolkit may prove useful, if used with care and caution.

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Table of Contents

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I. REQUIREMENTS FOR A TOD DEED:

The new law first defines an “interest in real estate” to mean “any estate or interest in, over or under land, including surface, minerals, structures, fixtures, and easements.”[5] The law then goes on to provide that an interest in real estate “may be titled in a transfer-on-death form by recording a deed, signed by the record owner of the interest, designating a grantee beneficiary or beneficiaries of the interest. Such deed shall transfer ownership of such interest upon the death of the record owner. A transfer-on-death deed need not be supported by consideration.”[6]

There is no requirement that the record owner obtain the signature, consent, or agreement of a DGB, nor is the record owner required to give notice of the deed to a DGB during the record owner’s lifetime.[7]

The new law requires that, in order to accept the real estate described in the TOD deed after the record owner’s death, a DGB must execute an affidavit affirming (1) that the DGB has verified the record owner’s death, (2) whether the record owner and the DGB were married at the time of the record owner’s death, and (3) the legal description of the real estate.[8] The DGB must then attach a copy[9] of the death certificate of the record owner to that affidavit, and file the affidavit and related documents with the office of the clerk of Superior Court of the county where the real estate is located.[10]

Depending on the date of death of the record owner, there may be a strict time requirement for the filing of the affidavit. If the record owner’s death occurred on or after July 1, 2024, the DGB must record the affidavit and related documents within nine (9) months of the record owner’s death. If this time requirement is not met, then the property will revert to the deceased record owner’s estate. However, if the record owner’s death occurred before July 1, 2024, then the recording of the affidavit and related documents is not subject to the nine-month time limitation.[11]

The fact that the law specifically addresses the death of a record owner occurring before July 1, 2024, which is the same date that the new TOD deed laws became effective in Georgia, seems to suggest that a Georgia TOD deed that was filed before July 1, 2024, when such deeds were not formally recognized in Georgia, became effective on July 1, 2024. However, the fact that there is no time requirement for the filing of the DGB’s affidavit under those circumstances leaves some uncertainty in the law as to if (and if so, when) any affidavit must be filed by the DGB, or if a reversion to the record owner’s estate would ever occur for TOD deeds signed by record owners who died before July 1, 2024.

While we do not recommend preparing a TOD deed, or any deed, without the assistance of a licensed and qualified attorney, the new Georgia TOD deed laws include a sample TOD deed form that can be found in O.C.G.A. § 44-17-3. Although use of this statutory form is not mandatory, any other form used for a TOD deed must be “substantially” similar to the statutory form in order to be valid.[12]

II. IMPORTANT CONSIDERATIONS:

a. Record Owner’s Retained Ownership and the Homestead Exemption:

Under a TOD deed, there is no actual transfer of any ownership interest to the DGB during the record owner’s lifetime: “A record owner who executes a transfer-on-death deed shall remain the legal and equitable owner until the death of such record owner, and during his or her lifetime shall be considered an absolute owner with regard to creditors and purchasers.”[13] The DGB receives no vested interest in the property until the record owner’s death and need pay no property expenses during the record owner’s lifetime. There is some uncertainty as to whether any of the 159 counties in Georgia will require the record owner to reapply for the homestead exemption after recording a TOD deed, though the record owner’s retention of ownership and the lack of transfer of any current property interest to the DGB both suggest that reapplication by the record owner for a homestead exemption should not be required.

b. Ownership of the Subject Real Estate by Joint Tenants with Rights of Survivorship:

If a parcel of real estate is owned by two or more joint tenants who are all listed on the TOD deed as grantors, then the DGB does not take any interest in the property until after all of those joint tenants have died. While one or more joint tenants is still living, the DGB receives no ownership in the subject property.

If only one joint tenant executes a TOD deed, the DGB named in that deed will only receive an interest in the property if that joint tenant is the last of all the joint tenants to die. One joint tenant’s execution of a TOD deed does not eliminate the survivorship rights held by the other joint tenants.[14]

NOTE: Some sections of the TOD laws use the term “joint owners” in a way that makes it appear to include only owners who hold property as joint tenants with rights of survivorship and to exclude owners who hold property as tenants in common. Tenancy in common is a form of joint ownership which carries no rights of survivorship. For clarity, we recommend never referring to multiple owners of the same property simply as “joint owners,” and instead referring to such owners either as “joint tenants with rights of survivorship” (or, if you prefer a pithier version, “joint tenants,” which still implies that the ownership carries rights of survivorship), or as “tenants in common,” which are more specific terms.

c. Revocation and Amendment of a TOD Deed:

The record owner of a TOD deed may revoke the DGB designation on that deed at any time prior to the record owner’s death “by executing, acknowledging, and recording in the office of the clerk of superior court of the county where the real estate is located an instrument revoking such designation. The instrument of revocation shall refer to the initial transfer-on-death deed, shall be signed by the record owner or such record owner’s duly authorized attorney-in-fact, and such signature shall be attested by an officer as provided in Code Section 44-2-15[15] and attested by two other witnesses. Such revocation may be included in another deed or other instrument of conveyance that is recorded. The signature, consent, or agreement of or notice to the designated grantee beneficiary or beneficiaries to the revocation shall not be required.” [16]

The record owner of a TOD deed may change the DGB designation on that deed at any time prior to the record owner’s death “by executing, acknowledging, and recording in the office of the clerk of superior court of the county where the real estate is located a subsequent transfer-on-death deed in accordance with this chapter. The signature, consent, or agreement of or notice to the designated grantee beneficiary or beneficiaries shall not be required. A subsequent transfer-on-death beneficiary designation revokes all prior designations of grantee beneficiary or beneficiaries by the record owner for the interest in real estate.”[17]

In general, real estate deeds in Georgia must be witnessed by two people and attested by an appropriate officer, and the officer making the attestation may count as one of the two (2) witnesses. However, since O.C.G.A. 44-17-4(a) specifies that any instrument revoking a TOD beneficiary designation on a TOD deed must be attested by an appropriate officer and two other witnesses, we strongly recommend having a total of three (3) witnesses, including the attesting officer, even if the revocation instrument is another deed.

If the subject property is owned by two or more record owners as joint tenants, and if all of those joint tenants execute a single TOD deed together, then a revocation or amendment of the grantee beneficiary designation would require the agreement of all of those joint tenants. However, if the subject property is owned by two or more record owners as tenants in common, then it appears that each tenant in common should be able to file a TOD deed naming a DGB to receive the interest which that tenant in common owns in the subject property at the death of that tenant in common. That tenant in common should also be able to change or revoke a TOD deed previously filed by that tenant in common without notice to or permission from either the DGB or any of the other tenants in common.

Although a TOD deed must be signed by the record owner, a revocation of the TOD deed may be signed either by the record owner or by the record owner’s “duly authorized attorney-in-fact.” An agent under a Power of Attorney (hereinafter “POA”) is a type of “attorney-in-fact,” though the term “attorney in fact” was dropped from Georgia’s POA statutes in 2017. As the best practice, we recommend that a record owner who wants to grant her agent power under a POA to revoke a TOD deed make sure the POA includes: (1) the general authority power to handle real estate transactions, (2) the specific authority power to change beneficiary designations, and (3) a special instruction that specifically grants the agent the power to revoke a TOD deed.

d. No notice to or consent of the DGB is required, but the DGB must take quick action to claim the property after the record owner’s death:

As noted previously, a record owner has no obligation to notify a DGB of the filing of a TOD deed by that record owner, to obtain a DGB’s consent to such filing, or to notify a DGB of any later revocation or amendment of that TOD deed. As far as we can determine, no person or governmental entity is ever required to notify a DGB named on a TOD deed of a record owner’s death or that the DGB has become the owner of that record owner’s interest in a subject property. This can mean that a DGB who doesn’t know about the TOD deed and doesn’t find out in sufficient time to file the required affidavit within 9 months of the record owner’s death will lose any ownership interest in the subject property that the DGB acquired at the record owner’s death.

NOTE: It can be difficult to obtain a death certificate if you are not a spouse, descendant, or sibling of the deceased record owner. This may prove to be a big hurdle for DGBs who are not in these categories. It may also provide opportunities for would-be heirs or beneficiaries under a Will to interfere with the operation of a TOD deed by blocking a DGB’s access to a death certificate.

e. Rights and Liabilities of the Designated Grantee Beneficiary:

The new laws provide that the DBG will take the interest in the real estate described in a TOD deed “at the death of [the] record owner, free and clear of any claims or interest as to a person who became the spouse of the record owner subsequent to the execution of the transfer-on-death deed, subject to all recorded conveyances, assignments, contracts, mortgages, liens, and security pledges made by the record owner or to which the record owner was subject during the lifetime of such record owner including, but not limited to, any recorded executory contract of sale, option to purchase, lease, license, easement, mortgage, deed of trust or lien, and to any interest conveyed by the record owner that is less than all of the record owner’s interest in the property; provided, however, that a nonconsensual lien against the grantee beneficiary or beneficiaries shall not attach to the property until the recording of the affidavit described in Code Section 44-17-2.”[18]

In other words, the DGB takes the interest transferred by a TOD deed subject to all the recorded encumbrances listed in the statute, as quoted above, that were made by the record owner or to which the record owner was subject during the record owner’s lifetime, and possibly subject to unrecorded claims or interests that are held by a person who became the record owner’s spouse before the TOD deed was executed.[19]

NOTE: This interpretation of O.C.G.A. § 44-17-5(a) assumes that the word “recorded” in that paragraph applies to each type of encumbrance listed in that paragraph, and not just to the first item in the lists following each instance of the word “recorded” (those first items being “conveyances” following the first appearance of “recorded,” and “executory contract of sale” following the second and final appearance of “recorded.”[20]

NOTE: Even though real estate interests obtained by DGBs via TOD deeds are subject to recorded encumbrances on that property, and possibly unrecorded claims or interests held by someone who became the spouse of the record owner prior to the execution of the TOD deed, they appear to be protected from the claims of the record owner’s other creditors. This creditor protection appears to be significantly broader than any creditor protection provided by other forms of POD and TOD beneficiary designations. Beneficiaries under other POD or TOD designations are potentially subject to claims by certain creditors of the deceased account or security holder.[21]

f. Effect of Judgments Against the Designated Grantee Beneficiary:

Judgments entered against a DGB during the record owner’s lifetime cannot attach to the property that is the subject of the TOD deed until after the record owner has died and the DGB has filed the affidavit required to accept the property.[22]

g. Gift and Estate Tax Considerations:

With respect to gift taxes, the record owner does not make a gift of any type, completed or otherwise, when the record owner files a TOD deed, even when there is no consideration. The record owner’s interest in the subject real estate will be included in the record owner’s estate for estate tax purposes at the record owner’s death, and that property will receive a stepped-up basis for income tax purposes at that time.

h. Effect of Death of a Designated Grantee Beneficiary Before the Death of the Record Owner:

If one or more of the DGBs dies before the death of the record owner, then the transfer to that predeceased DGB will lapse and be deemed revoked.[23] If there is more than one DBG and they are designated in the deed to become joint tenants with rights of survivorship, then the death of one or more of those joint DGBs prior to the death of the record owner will not invalidate an otherwise validly created joint tenancy estate as to any other joint DGBs who are living at the time of the record owner’s death.[24]

i. Title Insurance Policy Issued to Record Owner Should Protect a DGB’s Interest:

In general, a title insurance policy issued to a record owner who later files a TOD deed will effectively protect a DGB’s title after the record owner’s death, as long as there is no intervening deed.

j. TOD Deeds Are a Different Animal than POD Payee Designations and other TOD Beneficiary Designations:

Do NOT assume that designated grantee beneficiary designations on TOD deeds are subject to the same rules, restrictions, and limitations as POD payee designations on accounts or TOD beneficiary registrations on securities and security accounts!

Although the designations “POD” and “TOD” are often used interchangeably, it’s worth nothing that there are differences and inconsistencies between the laws governing POD payee designations on bank accounts, TOD beneficiary registrations on securities and security accounts, and designated grantee beneficiaries under TOD deeds. For example, there are differences in the level of protection from the record owner’s creditors that the beneficiary will receive, as noted above, and while POD payees on accounts are limited to persons or incorporated entities,[25] TOD deeds and TOD registrations do not appear to have that same restriction.

III. CONCLUSION:

It’s important for any record owner who files a TOD deed on or after July 1, 2024 to realize that unless the DGB on the TOD deed files the required affidavit within 9 months of the record owner’s death, any ownership interest in the subject property that transfers to the DGB by operation of law at the record owner’s death will revert to that record owner’s estate at that 9-month deadline if the required affidavit is not filed. Because there is no notification requirement – either of the filing of the TOD deed, of any amendment thereof, or of the record owner’s death – and because there is no guarantee that a DGB will be able to obtain a copy of the death certificate of a deceased record owner and file it with the required affidavit within the required time, we foresee many DGBs missing the affidavit filing deadline and losing their inherited interests in the subject properties. For these reasons, a record owner who files a TOD deed and who wants to ensure that the DGB will be able to retain the property past that 9-month deadline should notify the DGB of the filing of the deed, and should put in place some method for the DGB to be notified of the record owner’s death and to be provided with a copy of the record owner’s death certificate (preferably, a certified copy) soon after the record owner’s death.

Although the use of POD designations, TOD registrations, TOD deeds, and other forms of beneficiary designations may serve as good options to transfer some assets at death in some situations, it is important to remember that such designations do not self-adjust in the way Wills and Trusts are generally designed to, and such designations will override the provisions of a Will or Trust. Just as POD designations and TOD registrations cannot be revoked by the provisions of a Will, a TOD deed that has been executed, acknowledged, and recorded in accordance with Georgia’s new TOD deed laws cannot be revoked by the provisions of a Will.[26] For this reason, an asset owner who decides to use POD designations, TOD registrations, or TOD deeds must be sure to update those designations whenever a named payee or beneficiary dies, or whenever the owner’s estate distribution intent changes. Failure to update such designations can mean, for example, that an ex-spouse who was designated as a beneficiary during the marriage will still receive the asset, even though the owner may have remarried since that divorce and may have intended the owner’s new spouse or some other party, and not the ex-spouse, to receive that asset. There is no fix for such an outcome after the asset owner has died.

Given that many people simply forget to update such designations, the use of up-to-date Wills and Trusts to accomplish real estate and other asset transfers at death remains the best way to ensure that assets will be passed to the owner’s intended beneficiaries in the intended manner. This is why it is important to have a qualified and experienced estate planning attorney review your estate planning documents periodically to evaluate whether any changes are needed to those documents and to help ensure that your wishes for the disposition of your property after your death will be carried out as you intend.

The attorneys at Morgan & DiSalvo, P.C. are dedicated to helping you provide for your loved ones and protect your legacy. If you would like to discuss estate planning with us, please call us at (678) 720-0750 or e-mail us at info@morgandisalvo.com. We look forward to seeing you!

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Footnotes

[1] O.C.G.A. § 7-1-810 et seq.

[2] O.C.G.A. § 53-5-60 et seq.

[3] Some have assumed that the term “Lady Bird deed” refers to a deed signed by President Lyndon B. Johnson that was drafted to pass the real estate described in the deed to his spouse, Claudia Alta “Lady Bird” Johnson, at his death. However, the term originated with Florida attorney Jerome Ira Solkoff, who drafted the first Lady Bird Deed around 1982, almost 10 years after the death of President Johnson. Solkoff used fictional characters named Linton, Lady Bird, Lucie, and Lynda in his lecture materials and elder law book to describe the benefits of this type of deed, and, over time, the fictional name of the designated grantee beneficiary in Solkoff’s hypothetical fact pattern became associated with the deed itself. Beyer, Gerry W. and Nipp, Kerri G., Lady Bird Deeds: A Primer for the Texas Practitioner (January 8, 2011). Estate Planning Developments for Texas Professionals, January 2011, Available at SSRN: https://ssrn.com/abstract=1736862

[4] O.C.G.A. § 44-17-1 et seq.

[5] O.C.G.A. § 44-17-1

[6] O.C.G.A. § 44-17-2(a). Also, note that “consideration” in the legal context means any payment or other compensation given by the recipient or grantee of an interest to the grantor in exchange for the interest being granted.

[7] O.C.G.A. § 44-17-2(b).

[8] O.C.G.A. § 44-17-2(c).

[9] O.C.G.A. § 44-17-2(d). The statute does not specify if the copy of the death certificate must be a certified copy, or if a photocopy is acceptable. However, a certified copy is generally required for documents that are to be recorded in the real estate records.

[10] O.C.G.A. § 44-17-2(d).

[11] Ibid.

[12] O.C.G.A. § 44-17-3.

[13] O.C.G.A. § 44-17-7.

[14] O.C.G.A. § 44-17-6.

[15] O.C.G.A. § 44-2-15 requires that such attestation be by “a judge of a court of record, including a judge of a municipal court, or by a magistrate, a notary public, or a clerk or deputy clerk of a superior court or of a city court created by special Act of the General Assembly. With the exception of notaries public and judges of courts of record, such officers may attest such instruments only in the county in which they respectively hold their offices.”

[16] O.C.G.A. § 44-17-4(a).

[17] O.C.G.A. § 44-17-4(b).

[18] O.C.G.A. § 44-17-5(a).

[19] Ibid. This explicit exclusion of claims against or interests in the subject property of the TOD deed as to a person who became the record owner’s spouse after execution of that deed seems to imply that a DGB does take the property subject to the claims of a person who became the spouse of the record owner before the filing of the TOD deed. Attorneys who are negotiating or drafting divorce settlement agreements for their clients will need to consider these new TOD laws and address the divorcing parties’ rights with respect to any marital real estate that may already be, or could become after the divorce, subject to a TOD deed.

[20] See O.C.G.A. § 44-17-5(a).

[21] See, e.g., but not necessarily limited to, O.C.G.A. § 7-1-821, addressing the set-off rights of financial institutions that are creditors of POD account holders at the deaths of such account holders. See also, subsections (c) and (d) of O.C.G.A. § 53-5-68, which refer to the rights of claimants to a security registered in beneficiary (TOD) form after the death of the security holder.

[22] O.C.G.A. § 44-17-5(a).

[23] This provision is inconsistent with the provisions commonly used in Wills and Trusts, and with Georgia’s intestacy laws, which generally provide for a deceased beneficiary’s share to pass to that beneficiary’s descendants, if any are living at the death of the property owner or trust creator.

[24] O.C.G.A. § 44-17-5(b).

[25] O.C.G.A. § 7-1-810(11).

[26] O.C.G.A. § 44-17-4(c).