There are numerous proactive strategies to ensure your assets, at your passing, find their way into the right hands, just as you intended. In Texas, one such effective tool for the passing for real estate is called the Transfer on Death Deed (TODD). This simple yet powerful method lets you decide who inherits your real estate, bypassing the probate process entirely. How Does It Work?
A Transfer on Death Deed can be used to transfer land, residences, buildings, uncut timber, and mineral rights, among other real property. With a TODD, you would maintain full ownership rights during your lifetime, meaning you are able to sell the property or use it as collateral for a loan. The property never becomes a part of your estate because the Transfer on Death Deed takes effect upon your passing. The individual(s) you designate in the Transfer on Death Deed (the “beneficiary”) inherits your property interest upon your death, without the need for a probate procedure. Multiple beneficiaries may be named, and beneficiaries may be changed at any time by canceling or adding a new TODD. Any modifications you make to the Transfer on Death Deed are not required to be disclosed to the beneficiary.
Can I Use a TODD For Property Owned in Other States?
The answer is no. Although there are currently Transfer on Death Deeds in place in about half of the states in the United States, only real property located in Texas is eligible to use the TODD law and its related forms. To find out if the other states have laws that resemble this one, you will need to review .
What If I Have a Will?
Property that passes to heirs via a will must go through the probate court system. Read more about the probate process in this previous blog post written by BentOak Capital advisor Hayden Hill. A transfer on death deed, like other types of legal beneficiary designation documents, allows property to be transferred outside of probate. It’s important to note that a legal will is not entirely replaced by a Transfer on Death Deed. You may specify in your will exactly who will receive your personal property, such as your cars, jewelry, furniture, etc. To find out how a TODD can fit into your estate plan, consult with your attorney.
What are the Requirements for a Texas Transfer on Death Deed?
To be effective, the deed must:
- Contain the necessary components and requirements for a Texas recordable deed.
- It must be in writing.
- Contain the property’s legal description.
- Provide the name and address of the beneficiary or beneficiaries who have been designated.
- State that the Grantor’s (the property owner’s) interest will not be transferred to the designated beneficiary until the Grantor’s death.
- Be recorded prior to the Grantor’s passing in the deed records kept in the county clerk’s office of the county where the real property is located. Be signed by the Grantor in the presence of a Notary Public.
A TODD can be an affordable method of transferring property at death without probate. It does not, however, serve as a replacement for a will or legal counsel. To find out if a Transfer on Death Deed is appropriate for you, consult with your attorney. If you would like to reach out to our team for guidance on next steps, we’d love to help.
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