Section 114.054 of the Estates Code

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Capacity of Transferor; Use of Power of Attorney.
(a) The capacity required to make or revoke a transfer on death deed is the same as the capacity required to make a contract.
(b) A transfer on death deed may not be created through use of a power of attorney.
Added 84th Leg., R.S., Ch. 841 (S.B. 462)

Editor Comments

This section of the Texas Real Property Transfer on Death Act differs from Section 8 of the Uniform Real Property Transfer on Death Act in two ways. Cf. Bach v. Hudson, 596 S.W.2d 673, 675-76 (Tex.Civ.App.—Corpus Christi 1980) ("Bach had the requisite mental capacity to execute the contract in question if he appreciated the effect of what he was doing and understood the nature and consequences of his acts and the business he was transacting.").

First, under the Uniform Act, "[t]he capacity required to make or revoke a transfer on death deed is the same as the capacity required to make a will." The TRPTODA substitutes "contract" for "will." Cf. Chandler v. Welborn, 294 S.W.2d 801, 805 (Tex. 1956) ("A deed executed by a person of unsound mind may be set aside . . . . This cause of action survives the death of the grantor, and ordinarily passes to his heirs, devisees or personal representatives.").

Commentators generally agree that in Texas the mental capacity requirement for a contract is more demanding than the mental capacity requirement for a will. However, the substantive difference between the two standards remains stubbornly opaque. Cf. The Ethics of Capacity at 976 ("Donative capacity seems, then, to require a higher degree of cognition and understanding than contractual capacity.").

Second, the TRPTODA provides that "[a] transfer on death deed may not be created through use of a power of attorney." The Uniform Act does not address the authority of an agent under a power of attorney to make a transfer on death deed.

The TRPTODA, like the Uniform Act, is silent regarding the authority of an agent under a power of attorney to revoke a transfer on death deed. Similarly, the authority of a guardian to make or revoke a transfer on death deed is not addressed. Therefore, those matters are determined by other law.

The modifications to this section were reportedly made to reduce the risk of elder abuse. Cf. Weatherly v. Byrd, 566 S.W.2d 292, 293 (Tex. 1978) ("[T]he right to revoke a revocable trust, absent an agreement to the contrary, is a purely personal right of the settlor and does not vest in the guardian.").

Finally, note that neither the TRPTODA nor the Uniform Act address the court procedures, limitations periods or substantive grounds (other than capacity) for contesting the validity of a transfer on death deed. Cf. Revocable Transfer on Death (TOD) Deed at 158 ("The jurisdictions that have enacted revocable TOD deed legislation generally do not address a challenge to the transfer.").

It is unclear whether those rules will be drawn from the Texas law (statutory and common) governing inter vivos deeds or the Texas law governing wills. Cf. Beazley v Denson, 40 Tex. 416, 435 (1874) ("The charge of the court, as a general rule, as applied to deeds and ordinary contracts, cannot be doubted as a correct proposition of law. But the same presumption does not attach to wills . . . .").

Steve Smith

Court Decisions

No appellate court decision has interpreted any section of the TRPTODA.

Legal Commentaries

  • New Tool in the Toolbox at 3 ("As with most new statutes, there are some unanswered questions and potential pitfalls to avoid. . . . The statute does not say whether an agent may sell, lease, or encumber the property, or cancel the TODD. Absent a prohibition on doing so, he probably may.")
  • Texas TOD Deed Form at 1 ("Powers of attorney often involve the risk of self-dealing . . . . The Texas legislature preemptively resolved these issues by clearly providing that a TOD deed may only be created by a person with mental capacity, not by his or her agent under a power of attorney.")
  • Transfer on Death Deed: Information and Answers at 1 ("[A] power of attorney can NOT be used to execute a Transfer on Death Deed. The person executing the deed must be competent and sign it himself/herself.")
  • Transfer on Death Deeds: A Texas Primer at 1-2 ("[A] minor who is married or in the military may not execute a TODD even though he or she could execute a will. . . . However, a person unable to have testamentary capacity such as a minor who has had the disabilities of minority removed and who thereby gains contractual capacity may execute a TODD.")
  • Underwriting Manual: 5.02.4 Transfer on Death Deeds at 1 ("Stewart will accept a Cancellation of Transfer on Death Deed as a valid revocation so long as it substantially conforms to the statutory form provided in Estates Code Sec. 114.152 . . . . Stewart will not accept a revocation of a TODD made through a power of attorney.")

Uniform Act Text

Section 8. Capacity of Transferor.
The capacity required to make or revoke a transfer on death deed is the same as the capacity required to make a will.
Approved by ULC in 2009 (Uniform Act)

Uniform Act Comment

The official comments to the Uniform Act provide authoritative commentary regarding the drafters' intent.

For example, the comment to Section 8 states in part:

It is appropriate that a will and a transfer on death deed require the same level of capacity, for both mechanisms are revocable and ambulatory, the latter term meaning that they do not operate before the grantor's death.

The full comment is available on the Uniform Law Commission website.