How real estate is titled is sometimes overlooked when an individual completes their estate plan. If a Transfer on Death Deed (“TODD”) is a part of your estate plan, we strongly recommend confirming that your property casualty insurance provider is aware of the TODD and has agreed (in writing) to provide coverage upon your death.
To bind coverage, under Minnesota law, you will need to provide your insurance provider with the names and contact information of each TODD beneficiary and the coverage provided will be for a limited duration.
The requirement to notify your property casualty insurer of the existence of your TODD stems from the recent enactment of Minnesota statute § 507.072, which was a direct result of the case of Strope-Robinson v. State Farm Fire and Casualty Company, No. 20-1147. The statute, in part, was enacted to provide extended insurance coverage to TODD beneficiaries. In Strope-Robinson, Strope-Robinson was the beneficiary of a TODD for her uncle’s house. Days after her uncle’s death, the uncle’s ex-wife intentionally set fire to the uncle’s house. Strope-Robinson filed an insurance claim for the loss, but State Farm denied it, arguing that “there was no named insured with an interest in the dwelling.” Strope-Robinson then asserted claims against State Farm, arguing that State Farm had a duty to provide coverage for the loss sustained to the house. Applying Minnesota law and interpreting the terms of the insurance policy, the Court ruled in favor of State Farm, stating that the TODD transferred the house and real estate from the uncle to Strope-Robinson immediately upon the uncle’s death, therefore, Strope-Robinson was not named as an insured party on the homeowner’s insurance policy.
Minnesota Statute § 507.072 now requires insurance companies to provide extended coverage to TODD beneficiaries for up to 30 days after the real estate owner’s death or until the expiration date of the owner’s policy, whichever comes first. For TODD beneficiaries to be protected by the extended coverage under Minnesota Statute § 507.072, the real estate owner must notify their insurance company of the existence of a TODD and provide the names and contact information of each beneficiary.
Protecting Your Real Estate for Future Generations
Although there are advantages of using a TODD, it may not always be the best option for transferring real estate upon death. Some estate plans may offer better protection. There are several ways to hold an interest in real estate, each of which affects the transfer process differently. In Minnesota, the most common forms of ownership include:
- Joint tenancy with right of survivorship (joint tenancy);
- Tenancy in common;
- Entity ownership;
- Trust ownership; and
- Sole ownership.
With real estate often representing a sizable portion of a person’s estate, and the title often controlling its disposition at death, it is critical to ensure the real estate ownership aligns with the overall estate plan.
If you have further questions about how Minnesota’s newly enacted TODD legislation may affect your current estate plan, or if you would like to ensure that your real estate coordinates with your overall estate plan, the attorneys with Henson Efron’s Estate, Trust, & Probate and Real Estate practice groups are here to advise.
The purpose of this article is merely to provide general information and should not be construed as legal advice.