The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.
A transfer on death deed transfers an interest in real property from the owner to a designated beneficiary(ies) effective at the transferor’s death. This was established in 2015 by the 84th Legislature and is addressed in the Texas Estates Code §114.051. Originally, the State adopted promulgated forms for these deeds. However, in 2019, the 86th Legislature removed these forms and directed the Texas Supreme Court to promulgate new forms for creating and revoking a transfer on death deed. At the time this article was written, the Supreme Court of Texas has still not created these new forms.
Because a transfer on death deed is nontestamentary, probate proceedings are not necessary to transfer the transferor’s interest in the described real property. This has caused quite a bit of confusion about what is to be done. The fact that the marital status, divorce, property is as is without warranty of title and subject to prior liens and that it may be revoked (yet no specific form for revocation has been produced by the Texas Supreme Court), causes the use of transfer on death deeds to be risky at best.
During the transferor’s lifetime, a transfer on death deed does not affect any right, title, or interest of the transferor in the property. It does not vest any legal or equitable title in a desginated beneficiary, or subject the property to the claims of creditors of any designated beneficiary. Notwithstanding the recordation of a transfer on death deed, the transferor retains the right to transfer or encumber the property. The transferor also retains their present or future homestead rights and any ad valoreum tax exemptions to which the transferor is entitled. During the transferor’s lifetime, a transfer of death deed does not effect the rights of creditors of the transferor, secured or unsecured, and does not trigger any “due on sale” clause. Upon death of the transferor, a secured creditor’s rights are subject to the Texas Estates Code. Additionally, a transfer on death deed does not affect the eligibility for public assistance of either the transferor or any designated beneficiary.
To be effective, a transfer on death deed must be recorded before the transferor’s death. Likewise, after the transferor’s death, an affidavit of death must be filed that states that references the transfer on death deed.
Transfer on death deeds are relatively new to Texas. Quite a bit of confusion can occur as a result of the transfer on death deed, because it is revocable, must be recorded properly, and requires a subsequent filing after death. Further, if the real estate is owned by two (2) individuals, the death of one does not transfer the survivor’s interest and it is effected by divorce, For these reasons, and the fact the Texas Supreme Court has not provided guidance since 2019, transfer on death deeds are not a favored estate planning tool.
If you are making an estate plan in the near future, seek an attorney that can help answer any questions you may have and guide you on how to create the best least complicated estate plan. Having a well-crafted estate plan, drafted by an attorney and not pulled off the internet, will save your loved ones grief and money in the long run.
Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas. www.moakandmoak.com
