Texas Transfer on Death Deed

A Transfer on Death Deed is a legal tool that allows real property to be transferred to someone else after death of the real property’s owner. In recent years, the Transfer on Death Deed has gained popularity given the ease of transferring property and avoiding probate.

If an individual owns real property and dies without a Will or a Transfer on Death Deed, the piece of real estate must go through probate to pass to the property to individual’s heirs. By having a properly executed and recorded Transfer on Death Deed, probate can be avoided completely, and a property owner can ensure their property is transferred to whom they would like.

Terms of Note

• Real Property – This is the type of property that can be transferred with a Transfer on Death Deed. Real Property includes land, homes, buildings, uncut lumber and mineral rights.
• Owner – A person who holds legal title to a piece of real property.
• Beneficiary – The person or entity who is receiving property from a deceased person. This can be a person, organization, charity, trust, or institution.
• Probate – The legal process where the Court recognizes a person’s death and allows for the management and distributions of the deceased person’s estate. In short, probate transfers a deceased person’s assets into the names of a living person.
• Recording / Recorded – This is the act of putting a legal document into the County Clerk’s Property Records where the real property is located. Recording provides a paper trail of any sale or change in ownership of real property.

What is a Transfer on Death Deed?

A Transfer on Death Deed is a legal document that transfers real property upon death. When a person or persons purchase real property, the individual or individuals become Owners of the property. Only real property Owners can execute a Transfer on Death Deed.

How do I know if I’m an Owner of Real Property?

Only a real property’s Owner can execute a Transfer on Death Deed. The County Clerk of each Texas county holds all records of property ownership. This is called the Real Property Records. In large counties like Harris County and Fort Bend County, the real property records can be accessed online. In smaller counties, a visit to the County Clerk may be necessary.

When buying and selling real property, a Deed conveys ownership and creates legal title. If you have ever purchased a home or piece of land, a Deed was signed. That Deed created a legal chain of title, where a previous Owner granted their interest in the property to another.

When two unmarried individuals purchase a piece of land or a home together, each individual holds an interest in the property as Tenants in Common. This means that each individual owns an undivided one-half interest in the real property. If two unmarried individuals purchase a home together, they each have a 50% interest in the home and cannot give away the other’s interest in the home.

In Texas, most married couples purchase property as Tenants in Common. If the property is owned by the spouses as Tenants in Common, one spouse cannot transfer the other spouse’s interest in the real property.

To determine what type of ownership you have in your home, discuss with an attorney who can view the real property records in your county. Knowing your ownership interest is an important first step to determine if a Transfer on Death Deed is right for you.

How does a Transfer on Death Deed work?

When the Owner or Owners of real property execute a Transfer on Death Deed, it must be signed, notarized and recorded in the County Property Records where the real property is located. The Transfer on Death Deed must be recorded prior to an Owner’s death, otherwise it is ineffective.

When an Owner dies, immediately upon death a new Owner is named over the property. A Transfer on Death Deed only takes effect when an Owner dies. The Beneficiary of the Transfer on Death Deed does not have control over the property or ownership rights while the Owner is alive. Only upon death of the Owner does the Beneficiary gain control and ownership of the real property.

I am the Beneficiary of a Transfer on Death Deed and the Owner had died. What is next?

If you are named Beneficiary of a Transfer on Death Deed and the Owner has passed, the County Clerk only requires an Affidavit of Death and a copy of the Owner’s Death Certificate to effectuate the transfer. An Affidavit of Death is a document the Beneficiary will sign and notarize swearing that the Owner has died.

When a Beneficiary of a Transfer on Death Deed is ready to sell the property or use it as collateral, a title company may also request the Owner’s Death Certificate for verification purposes.

Can I take back the Transfer on Death Deed?

Yes! A Transfer on Death Deed is revocable. This means that when an Owner executes a Transfer on Death Deed, they can take back the transfer as long as they are alive. If an Owner’s Beneficiaries change or they no longer wish to give the property away at their death, an Owner is free to make changes.

To revoke a Transfer on Death Deed, a Cancellation of Transfer on Death Deed must be executed notarized and recorded in the County Clerk’s Property Records. This creates a clear line of title that shows a Transfer on Death Deed was filed and then was cancelled.

Can I sell my house if I executed a Transfer on Death Deed?

Yes! Since a Transfer on Death Deed is revocable during the Owner’s lifetime, it can be changed. Because the Transfer on Death Deed only takes effect upon death of the Owner, a Beneficiary does not have an interest in the property until the Owner dies. If an Owner wants to sell the property conveyed in a Transfer on Death Deed, they are free to do so.

It is important to note that if an Owner sells a property conveyed by a Transfer on Death Deed and then purchases a new piece of real property, the new property is not subject to the old Transfer on Death Deed. If a new piece of real property is purchased, a new Transfer on Death Deed must be executed.

How many people can I transfer the real property to?

As many you want! There is no limit on how many Beneficiaries a Transfer on Death Deed can have. However, when you have more than one Beneficiary, each Beneficiary receives an equal undivided share of the property. That means that you cannot leave varying percentages to several individuals. If you have two Beneficiaries, each Beneficiary has a 50% interest in the home. If you have 10 Beneficiaries, each Beneficiary has a 10% interest in the home. It may not be wise to have too many Beneficiaries since problems could arise in the future.

Often there may be Primary Beneficiaries and Alternative Beneficiaries. An Alternative Beneficiary only becomes a Beneficiary if the Primary Beneficiary has passed. It is important to know that you cannot name a group of individuals to serve as a Primary or Alternative Beneficiary. That means you cannot convey the property to “my children” or to “my descendants.” For a Transfer on Death Deed to be effective, Beneficiaries must be named specifically and have an address provided.

Can I use a Transfer on Death Deed to transfer my property to a minor Beneficiary?

Yes, however you want to make sure that someone has been appointed to oversee the minor’s estate. Anyone under the age of eighteen is not of legal age. Until the child turns eighteen, a custodian must manage the property for the minor Beneficiary. To appoint a custodian, you may do so through a Will or a Trust. If you fail to name a custodian for your minor Beneficiary, one will be appointed for the minor through court proceedings.

If I have a Will, do I need a Transfer on Death Deed?

Regardless of whether you have a Will, real property must go through the probate process upon an Owner’s death. If an Owner wishes to avoid the probate process, a Transfer on Death Deed is a work around that avoids probate. By avoiding probate, you may avoid court costs, administrative costs and attorney’s fees.

It’s important to know that a Transfer on Death Deed does not replace a Will. A Will ensures that your wishes are clear, property is distributed to the Beneficiaries of your choosing, and avoids family disputes. A Will also prepares for many “what if” situations. A Transfer on Death Deed is just one tool in the toolbox of your estate plan.

To determine whether a Transfer on Death Deed is right for you, contact one of our knowledgeable estate planning attorneys.