A Deep Dive into Texas Transfer on Death Deeds

In Texas, a property owner (referred to as the transferor) can transfer their interest in real property through a Transfer on Death Deed (TODD). This legal tool facilitates the seamless transfer of property upon the owner’s death, bypassing the need for probate.

Key Features of a Transfer on Death Deed

• Applicability: A TODD applies exclusively to real property, such as land or a home. It cannot be used to transfer personal property, such as cars or mobile homes.
• Execution Requirements:
  • The owner must be alive and mentally competent at the time of signing.
  • The deed must be signed in the presence of a notary.
  • It must be filed with the county clerk’s office before the owner’s death.
  • The deed cannot be signed under a Power of Attorney.
• Ownership and Beneficiaries:
  • A TODD is limited to one owner. If the property has multiple owners, each must execute a separate TODD.
  • Commonly, spouses execute individual TODDs, designating each other as the primary beneficiary, with alternate beneficiaries such as their children.
  • Unlike a Survivorship Agreement, which does not permit alternate beneficiaries, a TODD allows the owner to name one or more beneficiaries, who may include individuals, organizations, charities, or trusts. Beneficiaries can share ownership in specified percentages.

Advantages of a Transfer on Death Deed

• Avoidance of Probate: When a TODD is properly executed, notarized, and recorded, the property automatically transfers to the named beneficiaries upon the owner’s death, eliminating the need for probate. This can save the owner’s heirs significant time and expense.
• Revocability and Flexibility:
  • A TODD can be revoked at any time before the owner’s death by filing a revocation or creating a new TODD.
  • The property owner retains full control over the property, including the right to sell, lease, or mortgage it without beneficiary consent. If you sell the property, the TODD is revoked without further action.
• Tax Benefits:
  • Filing a TODD does not affect the owner’s eligibility for property tax exemptions, such as the General Residence Homestead, Age 65 or Older Exemption, Disabled Person Exemption, or exemptions for disabled veterans and their surviving spouses. These exemptions can provide substantial savings. To claim tax exemptions, contact your local Central Appraisal District.
• Alternate Beneficiaries:
  • Owners can name alternate beneficiaries to inherit the property if the primary beneficiaries predecease them, ensuring the property transfer aligns with their wishes.

Important Considerations

• No Immediate Transfer: Ownership does not change until the owner’s death. Remember, a Transfer on Death Deed is a future transfer of the property. It is not a present transfer of the property.
• Affidavit of Death: While an Affidavit of Death is not mandatory, it can serve as proof of the owner’s passing and confirm that the property has transferred to the beneficiary. Additionally, you can update the tax records by providing the tax office with a copy of the owner’s death certificate.

Conclusion

A TODD is a straightforward, cost-effective tool for estate planning in Texas. It allows property owners to retain full control of their property during their lifetime while ensuring an efficient transfer to their designated beneficiaries upon their passing. By avoiding probate and providing flexibility, the TODD simplifies the process of securing a legacy for loved ones or chosen entities. To learn more, we invite you to schedule a consultation with FOREVER LEGAL by visiting our consultation page. Our mission is to deliver personalized, sophisticated advocacy designed to address your unique needs. We encourage you to stay informed about our latest insights and updates by subscribing to our mailing list. Additionally, explore our Resource Center for comprehensive, downloadable Elite Guidebooks on business law, probate and estate planning, and guardianship law.

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