On September 1, 2015, Texas joined the the majority of states that recognize “transfer on death” (TOD) deeds. By filing the deed while alive, Texas real estate owners can transfer their property after death to a beneficiary without the necessity and expense of probate, and without a will. Upon providing proof of death, title to the property will pass to the named beneficiary.
Here are some of the major points of the new law:
• The TOD must state that the property will only transfer upon the owner’s death.
• The property must be owned by one or more individuals and not be held in trust or owned by an entity such as a corporation or limited liability company.
• The TOD can be revoked at any time before the owner’s death but revocation is more complicated where there are 2 or more owners.
• The TOD is recorded in the records office of the county where the property is located.
• A will may not revoke or supersede a TOD.
• The TOD cannot be created through the use of a power of attorney.
• The property may still be mortgaged.
• When a beneficiary receives the property via TOD, he/she take subject to any liens.
• If the deceased owner leaves an estate with debts and expenses, these may be enforced against the TOD property.
• A beneficiary may disclaim the TOD property.
While saving on attorney’s fees is a consideration for avoiding probate, we advise consulting with your financial advisor or attorney about whether the use of a TOD deed will work for your particular situation, especially where there is more than 1 property owner. In the meantime, the option of using a TOD deed to transfer real estate outside of probate is a favorable option for Texas property owners.
