In Ohio, a Transfer on Death (TOD) designation affidavit allows:
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Immediate transfer of property
A TOD designation does not cause an immediate transfer of property — the transfer only occurs upon the owner's death, and the owner retains complete ownership and control of the property during their lifetime, including the right to revoke the TOD at any time.
Property to pass to beneficiaries without probate upon owner's death
Tax-free property transfers
A TOD designation has no inherent tax-exemption effect; the property transfer may still be subject to federal estate taxes, capital gains taxes upon later sale, and Ohio inheritance considerations, making 'tax-free transfer' a legally inaccurate description.
Avoiding all estate taxes
A TOD designation does not avoid all estate taxes — the property's fair market value is still included in the decedent's gross estate for federal estate tax purposes under IRC § 2033, and the TOD mechanism only addresses the probate process, not tax liability.
Why is this correct?
Under ORC § 5302.22, a properly executed and recorded TOD designation affidavit causes real property to pass automatically to the named beneficiary upon the owner's death, without the need for probate administration. This is the core legal effect of the instrument — it is a probate-avoidance tool, not a tax-avoidance tool or an immediate transfer mechanism.
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