Transfer on Death Deeds (TODDs) are a relatively common estate planning tool in Minnesota that allow you to transfer a real estate title upon your death, enabling your beneficiary to avoid probate. But if a TODD is part of your estate plan, you and your beneficiaries should be aware of a recent change in Minnesota law that will impact your property insurance.

The change was driven by a rather dramatic 2017 event: A property owner left his home to a niece via a TODD. Six days after the owner’s death, his ex-wife intentionally set the house on fire. Without a TODD, the home would have been a probate asset, and covered by the deceased’s home insurance policy. However, because the home was transferred via the TODD immediately upon the owner’s death, the home insurer denied the niece’s claim for damage, arguing that the insurance policy did not transfer with the title. The insurer successfully defended this stance in court.

Recognizing that this case exposed some legal gray areas, the Minnesota legislature acted to improve the situation for TODD grantors and their beneficiaries. The legislature’s recently passed bill went into effect on August 1, and gives TODD heirs more protection than they previously had, provided that one condition is met: If you are leaving property to a beneficiary via a TODD, you must notify your insurer about the TODD and provide them with the name and contact information for your beneficiary.

If you have satisfied this requirement, your insurance coverage will transfer to your beneficiary and continue for 30 days after your death (or the date of the policy expiration, if that is less than 30 days). To be sure, this is still a slim window for your beneficiary to get their own new policy implemented, particularly in a time of mourning. It’s another good reminder of the importance of organization and early communication regarding your estate plan.

If your CCM team is aware of a TODD in your estate plan, we will review this development with you at an upcoming meeting. If you are unsure if you have a TODD, we encourage you to confirm with your estate attorney.