Transfer-on-Death and Life Estate Deeds
Topics on this page:
- What is the difference between a transfer-on-death and a life estate deed?
- Transfer-on-Death Deeds
- Life Estate Deeds
NOTE: Transfer-on-death deeds are authorized by Maryland law effective October 1, 2026. Deeds made before this date will only be legally effective if the person who made the deed dies after October 1, 2026.
What is the difference between a transfer-on-death and a life estate deed?
A deed is the written document that transfers title (or ownership) of a property from one person to another person. Both transfer-on-death and life estate deeds are tools for estate planning. Both allow a property owner to name one or more individuals on their deed who will automatically inherit the property when the owner dies. This transfer of ownership occurs outside of probate, and the deed protects the interests of the property owner because they do not need to give away their property while they are alive or otherwise expose themselves to risk by making someone a co-owner.
The main difference between the two deeds is that the Transfer-on-Death deed is a form document, uses non-legal terminology, and is meant to be intuitive for non-lawyers to complete correctly, while life estate deeds should be written by a lawyer to avoid technical pitfalls not found in Transfer-on-Death deeds. For example, there are two different kinds of life estate deeds, and one limits your rights as a property owner whereas the transfer-on-death deed does not allow for this possibility.
There are additional, nuanced differences between the two types of deeds, and as a property owner, you best protect your interests by seeking legal advice if you can.
Transfer-on-Death deeds are not a substitute for legal advice because they are not the best tool for everyone. Rather, they are a resource for property owners who cannot access an attorney and need a reliable form to make a simple beneficiary designation for their property.
Transfer-on-Death Deeds
**Coming Soon: A comprehensive Transfer-on-Death Deed Guide is in development. The Guide will include relevant Forms and instructions for using the Forms. Check back in September 2026 to access the Guide.
A Transfer-on-Death Deed is a legal document that allows a person to transfer ownership of their real estate to someone else when they die. In other words, it allows you to name a beneficiary for your home. The transfer occurs automatically and outside of the probate process.
The Transfer-on-Death Deed has no effect until you die, and you can cancel or revoke it at any time. You retain full power over your property and are free to mortgage or transfer the property to someone else during your lifetime. If you do not own any interest in the property when you die, this deed will have no effect.
The Deed will transfer the property with any existing loans, liens, or other claims still attached to it. These debts do not go away when you die and will remain with the property after it is transferred.
To be effective, a transfer-on-death deed must be signed, notarized, and recorded prior to the owner’s death.
NOTE: Transfer-on-death deeds are authorized by Maryland law effective October 1, 2026. Deeds made before this date will only be legally effective if the person who made the deed dies after October 1, 2026.
Read the law: Md. Code, Real Property § 14-1001 (as amended by H.B. 738, effective October 1, 2026)
Life Estate Deeds
A life estate deed is the legal document used to establish a life estate. A life estate is a type of co-ownership for real property in which two or more people have ownership rights that are split across time.
Ownership rights are divided between a life tenant and a remainderman or remaindermen, if there are more than one. The life tenant is the person who holds the right to possess and use the property for the duration of their life. The life tenant can use, rent, or improve the property, without the remainderman having any legal right to evict them or sell the property during their lifetime. For this reason, a life estate deed helps to protect the housing stability of the life tenant. The life tenant is generally responsibility for the financial responsibilities required to maintain the home while they are alive, such as mortgage payments, real estate taxes, utilities, and home repairs.
Obligation to the Remainderman: While you are the life tenant in a life estate deed, you may owe a duty to the remainderman to prevent the value of the house from decreasing either by your actions or lack of action. Whether this duty exists depends on the language used in your specific deed. If the duty exists, the remainderman may choose to take action to prevent you from making changes to the property they believe will damage the future value of the property or sue for damages already incurred.
The remainderman (or remaindermen) hold(s) the future interest in the property, which means that during the life tenant’s life, they do not have the right to use, transfer, or borrow against the property without the life tenant’s consent. However, once the life tenant dies, they are automatically the owner(s) and have the right to possess and use the property going forward.
Types of Life Estate Deeds
Maryland has two different types of life estate deeds: “life estate with powers” and “life estate without powers.” As implied by the names, you retain full power over the property with the first type, and with the second, you give up some control. The exact words used in the life estate deed are very important. Failing to include specific language needed for a life estate can have numerous unintended consequences, including not creating the kind of life estate you wanted or not creating a life estate at all.
In a “life estate with full powers” deed, the current owners retain complete control over the property, allowing you to change your mind in the future. It is like a gift that happens automatically at the time of your death. You have given away the house after your death, but you have kept the power to change your mind and take it back, sell it, borrow against it, give it to someone else, or do anything else the owner of a house can do. But if you do not do any of those things, then the deed will take effect when you die.
The life estate deed with full powers functions very similarly to a transfer-on-death deed. The primary differences are that:
- a lawyer should create a life estate deed to avoid errors that could unintentionally limit your control over your property;
- it is slightly easier for a remainderman to inherit under a life estate deed because the two deeds are processed differently by the Land Records office; and
- the transfer-on-death deed can be recorded regardless of whether there are liens against your property, whereas some counties require all liens to be paid before any type of life estate deed can be recorded.
In a “life estate without powers” deed, you are preserving your right to live in the home as long as you are alive, but you are giving up your ability to fully control the property. It is a gift now of the right to your home in the future, which means you do not have the power to sell or mortgage the property without the consent of the remainderman. Because you cannot undo a life estate deed without powers without the consent of the remainderman, you should not sign a life estate “without powers” deed unless you are absolutely convinced that you want to make a permanent gift of your home or that the remainderman would join you in making any necessary changes.
- Medicaid-funded Long-Term Care: The main advantage of the life estate without powers deed is that it may protect the owner’s home from Medicaid Asset Recovery after they pass away. However, the creation of the deed is an asset transfer that is subject to a five-year look-back period when one’s eligibility for Medicaid is being assessed. If you have questions about whether your life estate deed will impact your ability to qualify for Medicaid or protect your property against Medicaid Asset Recovery, please consult a lawyer.
- Tax Consequences: Neither type of life estate deed impacts whether an inheritance tax would be due as a result of the property transfer upon your death. However, creating a life estate without powers can impact the capital gains tax the remainderman will incur in the future. See a lawyer or tax professional for more information on tax implications of a deed transfer.
Life estates can be created through deeds, wills, and trusts. This article only addresses life estate deeds. This legal document must be recorded with the Land Records in the Circuit Court of the county where the property is located.
Read the case: Berrett v. Standard Fire Ins. Co., 166 Md. App. 321 (Court of Special Appeals 2005)
Read the law: Md. Code, Real Property § 14-102
Read the law: Md. Code, Real Property § 4-105, § 4-202
Termination of a Life Estate Deed
Generally, the life estate terminates on the death of the life tenant, assuming that the life tenant is the measuring life. However, there may be other situations where a life estate may terminate. Life estates can also terminate under the following circumstances:
- Unilateral termination of a life estate with powers deed: The life tenant of a life estate deed with powers can terminate the deed without agreement from the remainderman.
- Agreement: For either type of life estate deed, the life tenant and the remainderman may agree to terminate the life estate by selling the property or merging their interests.
- Foreclosure: A life estate does not protect the property from foreclosure if there is an outstanding mortgage or unpaid property taxes.
- Surrender: The life tenant may voluntarily relinquish their rights to the property, (whether they need the consent of the remainderman depends on whether the deed is a life estate deed with powers or without powers), effectively terminating the life estate.
If you are seeking to terminate a life estate, consult with an attorney.
Read the case: Berrett v. Standard Fire Ins. Co., 166 Md. App. 321 (Court of Special Appeals 2005)