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Contributed By: Neil M. Meyer

David Strope owned his home in Orr, Minnesota.  At his death he wanted to give the home to his niece Dawn Strope-Robinson.  To accomplish that goal he signed a transfer on death deed on August 10, 2017.  The deed was recorded on August 11, 2017.  David died on August 14, 2017.  Six days after his death his ex-wife intentionally set fire to the home, damaging the home and the personal property inside the home.  Dawn was appointed the special administrator of her uncle’s estate and filed a claim with State Farm for coverage of the loss of the house, loss of use for the fair rental of the house and loss of personal property.  State Farm granted the claim for the loss of the personal property but denied the other claims because Dawn was not a named insured under the policy, and the named insured, David, did not have an insurable interest in the property because at his death ownership passed to his niece Dawn. Dawn then sued State Farm to recover her loss. Strope-Robinson v. State Farm Fire and Casualty Company.

The 8th Circuit Court of Appeals reviewed the Minnesota transfer on death deed statute.   The statute says that the grantor owner’s property interest (David Strope’s interest) transfers upon the death of the owner.  Under Minnesota law the 8th circuit concluded that David’s interest transferred to Dawn on August 14, 2017 the day of his death.  The court concluded that on August 20, 2017, the date of the arson, David had no interest in the property and that Dawn was the sole owner of the property. In siding with State Farm the court noted that the insurance contract was a personal contract with David, his death triggered the transfer of ownership to Dawn, and thus his estate had no claim to the property and since Dawn was not a party to the insurance contract State Farm properly denied the claim.

Many people take advantage of Minnesota’s transfer on death deed (“TODD”)  statute as a simple and efficient way to transfer ownership of your property to another at your death.  The TODD does not restrict you from selling your property during your lifetime or removing the TODD designation if you later change your mind.  While the facts of this case may be unusual it is a good idea to have your property insurance policy add the name of the person who will receive ownership of the property at your death to your insurance policy either as a named insured or as an additional insured.