hide my visit

Transfer on Death Deed: Information and Answers

A new law went into effect on 9/1/17 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.

 

Click below for a Toolkit on passing on your house or land without a will

What is a Transfer on Death Deed?

A new Texas state law allows real property owners to record a “Transfer on Death Deed” naming a beneficiary to own that real property after they die. With a properly recorded Transfer on Death Deed, no probate is needed to transfer the real property.

What is considered real property?

Real property that can be transferred with a Transfer on Death Deed includes land, homes, buildings, timber and mineral rights.  It can NOT be used to transfer personal property such as furniture, jewelry, china, clothing, etc.

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 can only be used 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 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.  Not having to go through probate allows 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.

Does a Transfer on Death Deed replace a will?

The Transfer on Death Deed does not completely replace a will. A will can still be an important part of your estate plan. Your will may provide how real or personal 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.

What are the requirements of the Transfer on Death Deed?

The Transfer on Death Deed must include the legal description of the property and the name and address of one or more beneficiaries. 

Where is a Transfer on Death Deed filed (recorded)?

It must be signed, notarized and recorded in the county where the property is located before the property owner dies.  There is usually a per page fee for filing the deed.

I don't have my deed, but I have a copy of the tax record. Is this ok?

No.  It is highly recommended that a copy of the actual deed is obtained from the county where the property is located as the legal description of the property in tax records can be incomplete or inaccurate.

When is a Transfer on Death Deed Effective?

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.  

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.

What if the beneficiary I chose 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.

Must the beneficiary be a person?

No, a beneficiary may be a person, organization, institution, charity, trust, etc.

Can the beneficiary be a general group 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 and addresses must appear on the face of the deed.

Does a beneficiary need to sign a 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.  While it is up to you whether you tell the beneficiary that you have named him/her in a Transfer on Death Deed, it is recommended that you inform affected persons of your plans.

Does the beneficiary have any control of the real property during my life?

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. Your property is not subject to the beneficiary’s debts. Your interest in the real property goes to the beneficiary only after you die.

I named my son as beneficiary 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 Transfer on Death Deed.

I own the property with my wife. As Texas is a community property state, 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 deceased's share of the property in certain circumstances.  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.  Further 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 property with my wife and hold power of attorney for her financial 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.

Can I file a Transfer on Death Deed even if I have not paid it off yet?

Yes, you may file a Transfer on Death Deed even though you have not finished paying off a mortgage.  You will still have to make payments while you are alive and if you have not finished paying the loan by the time you have passed away, the beneficiary will still have to pay the mortgage.

Does a Transfer on Death Deed shield the property from the claims of creditors?

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.

Will the property be subject to Medicaid Estate Recovery under current law if I currently receive 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" (value on the date of death) in the real property and may owe no tax on their inheritance.  

Can a Transfer on Death Deed be revoked?

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. 

Can I sell my propety even though I have filed a Transfer on Death Deed?

Yes, the filing of a Transfer on Death Deed does not change your ownership rights.  It does not take effect until you die so you can sell the property, get loans on it, and maintain your tax exemptions.

What happens when the property owner dies?

The person who is named as a beneficiary should file an "Affidavit of Death" in the county records.  The person named will then own the property without having to go to probate court.

What recent changes have been made to the Transfer on Death Deed?

In September of 2017, the Texas legislature added more boxes to more specifically designate beneficiaries.  For instance, if you have named 2 or more primary beneficiaries, the Transfer on Death Deed form now allows you to choose whether the share of a beneficiary who dies before the property owner goes to the beneficary's children...or to the other named beneficiaries.