What is a Transfer on Death Deed?
Texas allows an individual (transferor) to transfer their interest in real property using a Transfer on Death Deed. The terminology of this deed differs from other deeds, which use the terms “grantor” and “grantee”.
This property deed names beneficiaries to own the real property at transferor’s death.
A beneficiary may be:
- A person(s)
- An organization
- An institution
- A charity
- A trust
Good to know: You may also name alternate beneficiaries. This is highly recommended should the initial beneficiaries die before you do.
The primary reason to use this deed to transfer property after death
With a properly recorded Transfer on Death Deed, no probate is needed to transfer the real property described in the deed.
As this deed conveys property outside of probate, it avoids incurring court and administrative costs to deed the property to your beneficiaries. Under current law, it may also exclude the real property from Medicaid estate recovery.
The Transfer on Death Deed is not a testamentary instrument or a will. It does not replace a will.
- A Transfer on Death deed does not need to comply with the “testamentary formality” requirements of Texas wills. As long as the deed meets the requirements of the deed statute, it will be recognized.
- Property conveyed by a will must go through probate. Property conveyed by a Transfer on Death deed does not.
What is needed to transfer property on death
A Transfer on Death deed must be in writing and contain the following information:
- The name and address of the transferor.
- The names and addresses of designated beneficiaries
- A valid legal description of the property.
- It must be signed by the transferor in front of a notary.
- Must state that the beneficiaries will only acquire an interest in the property upon the death on the transferor.
- The deed must be recorded in the county clerk’s office of the county where the property is located before the transferor dies.
- No consideration is required.
- The beneficiaries do not need to sign this deed.
Helpful points about Transfer on Death Deeds
- If your will and Transfer on Death deed show differing beneficiaries, 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 deeds.
- A will may not revoke or supersede a Transfer on Death deed. This deed will override the terms of a will.
- Automatic transfer of property at death avoids the need to transfer the property through the Texas probate system.
- This transfer may prevent the property from being taken by the state as reimbursement for Medicaid benefits.
- The property continues to qualify as Texas homestead. This provides favorable property tax benefits and may protect the property from creditor claims.
- Transfer on Death deed transfers real estate with no warranty of title.
- A power of attorney may NOT be used to execute a Transfer on Death deed.
- Mortgages, liens and notes follow the property and become the responsibility of the new owner.
- The Transfer on Death deed may be revoked or cancelled. The transferor may change his/her mind.
- A Transfer on Death deed does not affect the owner’s right to use, sell or convey the property during their lifetime.
The time to plan for the transfer of property upon the death of a loved one is before they pass.
Texas Property Deeds is a service of The Steinbach Law Firm, established in 1964. All deeds are prepared by an attorney licensed in Texas and Board Certified by the Board of Legal Specialization in Residential Real Estate Law. AV Preeminent rating. Questions about transferring property? Call us at 972-960-1850. Or, visit our website to provide information to prepare your deed. www.texaspropertydeeds.com Quick and easy preparation. Most deeds $195.