The following is provided for informational purposes only and is not, nor should it be construed as legal advice.
Effective on September 1, 2015, Texas joined a growing group of other states by passing legislation that can transfer title to real property upon the death of a person without going through probate proceedings. It should be noted that this procedure does not eliminate the need for a Last Will and Testament or for the trust provisions in that Will, but it does fill a long needed niche for those persons who have relatively simple estates and have the ability to pass other assets owned as non-probate assets. This article is dedicated to answering common questions which are anticipated surrounding this new law/estate planning tool.
- WHAT IS A “TRANSFER ON DEATH DEED?” Simply stated, it’s a deed which does not take effect until your death. It yields a result similar to a survivorship designation on your bank account. It will automatically pass title to the beneficiaries that you name without the need of a probate proceeding. It is anticipated that this tool will be particularly useful when the only real asset owned by decedent is an interest in real property such as the Homestead.
- CAN I NAME AN ALTERNATE BENEFICIARY, JUST IN CASE THE PRIMARY BENEFICIARY NAMED HAS PRECEDED ME IN DEATH? Yes, in a typical situation where a deceased spouse wishes to pass his/her interest in community property to the surviving spouse and then to the children if there is no surviving spouse, this creates a very simple and uncomplicated method of doing so.
- WHO CAN EXECUTE THIS TYPE OF DEED? Anyone who holds title to real property in Texas can execute a transfer on death deed.
- WHAT ARE THE REQUIREMENTS FOR THIS TYPE OF DEED TO BE EFFECTIVE? (Est. §114.055)
- It must contain the essential elements and formalities of a deed;
- It must state that the transfer of an interest in real property to the designated beneficiary is to occur at death; and
- It must be recorded before the transferor’s death in the deed records of the County Clerk’s office of the county in which the real property is located.
- IS IT A TESTAMENTARY DOCUMENT? No, it is a non-testamentary document; therefore, the deed passes title to the real property involved outside of probate. (Est. §114.053)
- IS IT REVOCABLE? Yes, if you wish to cancel or otherwise void the deed during your lifetime, it can be done fairly simply through a revocation filed in the real property records with the same formality as the original deed. This is true even if another instrument, such as your Will, contract, or other document contains provisions which have contrary terms. (Est. §114.053)
- CAN I USE A POWER OF ATTORNEY TO EXECUTE THIS TYPE OF DEED? No, this is not a power that can be delegated to another person through a power of attorney. (Est. §114.054)
- WHAT IF MY WILL AND MY TRANSFER ON DEATH DEED ARE DIFFERENT IN THE DISPOSITION OF MY REAL PROPERTY? A Will may not revoke or supersede a transfer on death deed. Therefore, if your Will gives “Blackacre” to Joe, and your transfer on death deed gives the same “Blackacre” to Sally, the title to “Blackacre” passes to Sally. ((Est. §114.05 7(b))
- WHAT IF I MAKE MY SPOUSE THE BENEFICIARY OF MY TRANSFER ON DEATH DEED AND THEN GET A DIVORCE? If a marriage between the transferor and a designated beneficiary is dissolved after a transfer on death deed is recorded, a final judgment of the court dissolving the marriage operates to revoke the transfer on death deed to that designated beneficiary, if notice of judgment is recorded before the transferor’s death in the records of the County Clerk’s office of the county where the deed is recorded. ((Est. §114.057 (c))
- HOW DOES THE COUNTY CLERK DETERMINE WHEN THE PROPERTY TITLE PASSES FROM THE TRANSFEROR TO THE TRANSFEREE? A copy of the transferor’s death certificate should be filed in the County Clerk’s office in the county where the property is located in the deed records.
- MUST I HIRE AN ATTORNEY TO DRAFT THE DEED? The simple answer is both, yes and no. There is nothing in the law that prevents you from drafting your own legal documents, but most people find out (many in a hard way) that the relatively minor legal cost of performing this service is very small compared to the cost of the litigation and unintended consequences which could ensue from improperly drafted documents.
- WHAT IF I OUTLIVE ALL THE BENEFICIARIES NAMED IN MY TRANSFER ON DEATH DEED? If there are no surviving beneficiaries of this transfer on death deed, then the deed shall be deemed to be canceled by you.
It is believed that future cases filed in the court will further clarify this statute. It should further be noted that this relatively new legislation does not replace the need for estate planning— it only puts another tool in the toolbox of your estate planning attorney when he/she is drafting your Last Will and Testament.
James Bright has been admitted to practice before the Federal Courts for the Southern District of Texas and Eastern District of Texas as well as all of the Justice Courts, Probate Courts, County Courts at Law, District Courts, Courts of Appeal and Supreme Court for the State of Texas. He maintains an office in Houston and by appointment another at 208 McCown Street in the heart of historic Montgomery. Contact may be made by telephone (936) 449-4455 or (281) 586-8277. For more information about wills or probate in Texas, please see- www.houstontxprobate.com
IF YOU WISH TO SUGGEST A TOPIC FOR THIS COLUMN, SEND TO:
JAMES M. BRIGHT
14340 TORREY CHASE BLVD., SUITE 150
HOUSTON, TX 77014
EMAIL: [email protected]
Attorney at Law