Transfer on Death Deed: Information and Answers
A new law went into effect on 9/1/17 and this article and related forms will be updated.
If you would like to see if you qualify for free help completing a Transfer on Death Deed you can call the Transfer on Death Deed Project at 512-637-6752.
The Transfer on Death Deed does not replace a will. The will remains an important part of your estate plan. Your will may provide how property without beneficiary designations passes, and may provide what happens if all beneficiaries predecease you. Your will may allow you to provide in detail who gets items of personal property, including your motor vehicles, heirlooms, and furniture. You should consult your attorney about how a Transfer on Death Deed fits into your estate plan.
A properly executed Transfer on Death Deed is effective if it is recorded with the County Clerk in the county in which the real property is located, before the death of the grantor. If the deed is not recorded before the death of the grantor, it is ineffective.
No, the Transfer on Death Deed is not effective until you die. That means the beneficiary you name in the Transfer on Death Deed cannot control your property. You do not need the beneficiary’s permission to sell or mortgage the land. You are not subject to the beneficiary’s debts. Your interest in the real property goes to the beneficiary only after you die.
Yes, a Transfer on Death Deed may be revoked or cancelled several ways. The deed is considered revoked if you record a new Transfer on Death Deed, or if you record a cancellation of Transfer on Death Deed. A divorce decree will also invalidate the deed as to a spouse beneficiary. These instruments must be filed before the death of the grantor in the county where the property is located. The deed is also revoked by selling all of the interest in the real property.
I already have a will, why would I want a Transfer on Death Deed?
Whether you have a will or not, your property will still have to go through the probate court system. A Transfer on Death Deed conveys property outside of probate. The avoidance of probate allows for you to avoid incurring court costs and administrative costs to deed the property to your beneficiary. Under current law, it also excludes the real property from Medicaid estate recovery.
What is Considered Real Property?
Real property that can be transferred via a Transfer on Death Deed includes land, improvements, uncut timber and mineral rights.
Can a Transfer on Death Deed be used for personal property?
No, the Transfer on Death Deed can only transfer real property.
Can I use a Transfer on Death Deed for Real Property in other states?
No, while currently, about 1/2 of the states in the U.S. have some form of Transfer on Death Deed, the Texas Transfer on Death Deed law and its related forms are only effective for real property located in Texas. You will have to check the laws in the other states to determine if they have a similar deed.
I dont have the deed, but I have a copy of the tax record. Is that okay?
It is highly recommended that a copy of the actual deed is obtained from the County where the property is located as information in tax records can be incomplete or inaccurate.
Where is a Transfer on Death Deed filed (Recorded)?
A Transfer on Death Deed must be filed (recorded) with the county clerk in where the real property is located. There is usually a per page fee for filing the deed.
What is the beneficiary I choose dies?
A beneficiary must survive the grantor by 120 hours (5 days) for the transfer to be effective. It is highly recommended that a person executing a Transfer on Death Deed always identify an alternate beneficiary. If there is no beneficiary upon death, the Transfer on Death Deed is not valid and the property must be placed into probate.
Can I name more than one beneficiary?
Yes, the Transfer on Death Deed law allows you to name more than one beneficiary. Also, the law allows you to name an alternate beneficiary. This is highly recommended in case the first beneficiary dies before you do.
Can the beneficiary be an entity?
Yes, while a grantor must be an individual person, a beneficiary may be an organization, institution, corporation, etc.
Can the beneficiary be a class of people?
No, be specific. The Transfer on Death Deed does not allow you to name classes of relatives, such as “all of my children.” The beneficiaries’ individual names must appear on the face of the deed.
Does the beneficiary need to sign the Transfer on Death Deed?
No, the beneficiary need not sign or agree to a Transfer on Death Deed. Further, the Transfer on Death Deed does not need to be delivered to the beneficiary to be effective. It is up to you whether you tell the beneficiary that you have named him/her in a Transfer on Death Deed.
I named my son as beneficary in my Will, what if I name someone else in the transfer on death deed?
If your will and Transfer on Death Deed are inconsistent, the Transfer on Death Deed controls who owns your real property after your death. This applies to wills executed before or after the Deed.
I own the property with my wife and Texas is a community property state so I do not need a Transfer on Death Deed correct?
If a husband and wife own community property in Texas, it is true that the surviving spouse can claim the property. If a spouse dies without a will, though, the surviving spouse will have to file an “affidavit of heirship”. Challenges to this can be made and the affidavit alone does not confer title. Corroborating evidence of family members may be needed. A Transfer on Death Deed transfers title and eliminates the need for additional affidavit proof.
I own the house with my brother, must we both sign?
Joint tenancy is where more than one person owns real property and the property passes automatically on the death of one joint owner to the surviving joint owners. Ideally, all joint tenants should sign a Transfer on Death Deed. The death of one does NOT transfer the property to the beneficiary. The real property passes to the other transferor.
- If a brother and sister own real property as joint tenants and one dies, the surviving joint tenant will own the entire real property. The property will only vest with the beneficiary after the death of the last transferor.
- If only one owner signs, then his/her interest will transfer to a beneficiary only if he is the last joint tenant surviving. If the transferor dies before another transferor who has not executed a Transfer on Death Deed, then the deed becomes invalid.
I own the property with my wife and hold power of attorney for her affairs. Can I execute a transfer on death deed for both of us?
No, a power of attorney can NOT be used to execute a Transfer on Death Deed. The person executing the deed must be competent and sign it himself/herself.
Will the property be subject to Medicaid Estate Recovery under current law if I currently recieve or plan to apply for long term care?
No, as the property does not go through the probate system, under current law it is not subject to Medicaid estate recovery, whether you are currently receiving long term care or plan to apply for it.
What are the tax consequences of a Transfer on Death Deed?
For tax purposes, property transferred with the new deed should be treated in the same way as real property passing through probate. For most estates, there should be no federal or state estate tax (check with your accountant about current estate taxes). Additionally, the heirs should get the “stepped up basis” (date of death value) in the real property and may owe no tax on their inheritance.
No, property owners cannot escape the claims of creditors with a Transfer on Death Deed. All valid liens, mortgages, and judgments, as well as claims of other creditors, may be applied against the real property. Mortgages, liens and notes follow the property and will now be the responsibility of the new owner. Note: Creditors are not notified of a change in ownership when a transferor dies. The beneficiary can do so.