Here’s more of what you need to know
I recently wrote about the requirements and characteristics for a Texas Transfer on Death Deed. See The Texas Transfer on Death Deed: Do I Need One? | GlavyLaw. Here, I’ll provide you with information about the requirements and limitations imposed on this type of deed.
Recap
A Transfer on Death Deed allows you to transfer real property, such as your house, upon your death. This is accomplished without probate. You can change your mind. If you do, you must file your revocation in the same county records as the original deed. This deed, unlike other deeds, allows you to maintain ownership and control of the property during your lifetime. At the end of your life, you transfer, by deed, what you own to your designated beneficiary. This means: if you sold the property during your lifetime, there is nothing to transfer.
Requirements
An effective Transfer on Death Deed must meet the following statutory requirements:
- It must be in writing and must contain a legal description of the property–not just an address.
- It must contain the name and address of the designated beneficiary or beneficiaries.
- It must be signed by the transferor in the presence of a notary public.
- It must state that the transfer occurs on death.
- It must be recorded before the transferor’s death in the county deed records where the property is located.
- It must have been created by the transferor and not through a power of attorney.
- The real property must be in Texas.
- The deed must have been executed on or after September 1, 2015.
Limitations
A Transfer on Death Deed provides little protection from your creditors. The property remains subject to an outstanding mortgage. When the property transfers at death, the beneficiary receives the property subject to any mortgage and other encumbrances, such as taxes. Also, the estate executor may use the property to satisfy creditor’s claims against the estate when the probate estate has insufficient assets. This deed does provide protection from Medicaid expense recovery.
Conclusion
This deed is a newer and cost effective tool you should consider for your estate plan. You maintain ownership and control of your property and transfer it to your beneficiary when you die. There are stringent requirements and notable limitations. Although it is inexpensive, the Transfer on Death Deed doesn’t replace a Will. A Will remains a cornerstone to your estate plan.
