When Transfer-on-Death Deeds Promise to Avoid Probate but Create Chaos
We love shortcuts. Grocery store self-checkout. The “express” car wash. Even skipping steps in estate planning, like using a Ladybird deed (also called a transfer-on-death deed) to keep your house out of probate.
On the surface, a Ladybird deed looks amazing. Sign a deed, name who gets the house, and no court gets involved. Cheap, simple, done. Except, like most things in estate planning, what sounds easy can turn into a mess for the people you leave behind.
Today, I sit down with Minnesota probate attorney Jen Gumbel to dig into the good, the bad, and the ugly of transfer-on-death deeds. She’s seen firsthand how they play out in real life, and the results aren’t always pretty.
Why People Use Deeds to Avoid Probate
Probate gets a bad rap. Court filings, attorney’s fees, delays—who wouldn’t want to avoid it? A Ladybird deed promises a workaround: pass real estate directly to your chosen beneficiary without dragging your family through probate.
But, the form is technical, the rules are state-specific, and if you miss even one detail, the deed may not work as intended.
The Problems Nobody Tells You About
Here’s where things get messy:
DIY Pitfalls: You can fill out a transfer-on-death deed yourself, but an error in the property description or a missing spousal signature can invalidate it. The county recorder will file it, but that doesn’t mean it does what you think it does.
Beneficiary Risks: If the person you name dies before you, the outcome depends on your state’s law. Sometimes it passes to their kids, sometimes it doesn’t, and suddenly, you’re back in probate.
Joint Ownership Confusion: Want to leave the cabin to all three kids equally? If you don’t set clear rules, joint tenancy can default to “survivor takes all.” Not exactly the family harmony you pictured.
Insurance Gaps: One Minnesota case involved a house that burned down right after the owner’s death. The insurance company refused to pay out because the new owner wasn’t on the policy.
My Take
If your goal is truly to make life easier for the people you love, don’t settle for a shortcut. Invest in a strategy. Sit down with someone who knows what they’re doing and map out a plan that works in your state, with your assets, and your family dynamics.
Because probate avoidance isn’t the real win. The real win is peace of mind—for you now, and for your family later.
Listen to the full episode here:
