4,834
edits
No edit summary |
No edit summary |
||
Line 1: | Line 1: | ||
[[Category:Featured Article]]<indicator name="featured">[[File:Featured_article_star.svg|25px]]</indicator>[[File:TRPTODA.jpg|150px|border|right|Senate Bill 462]]''Summary: Article, targeted to non-lawyers, provides general information regarding the Texas Transfer on Death Deed.'' | |||
In 2015, Texas approved legislation authorizing a new method of transferring real property that is located within the state. | |||
https://www. | The [[Texas Real Property Transfer on Death Act]] (TRPTODA) allows an owner to name a beneficiary to receive the property. | ||
The property passes to the beneficiary outside the regular probate process by means of a transfer on death deed (TODD). | |||
Until death, the owner retains the absolute right to revoke the deed or sell, mortgage or otherwise encumber the property. | |||
This article, in question-answer format, addresses some of the various legal and practical issues raised by the TRPTODA. | |||
Its purpose is to assist non-lawyers investigating whether a Texas TODD is an appropriate estate planning device for them. | |||
The information is necessarily general and not a substitute for advice from an attorney concerning a particular fact situation. | |||
—[[Attorney Directory:Steve Smith-Pflugerville|Steve Smith]] | |||
''<big>Why is a Texas TODD a popular estate planning device?</big>'' | |||
Because it is a statutorily authorized method of bypassing Texas probate. Avoiding probate saves legal fees and court costs. | |||
A Texas TODD can also be useful for Medicaid. For example, it is disregarded for purposes of determining program eligibility. | |||
But note that a transfer on death deed has a few serious limitations. For example, it often doesn't handle contingencies well. | |||
''<big>What is real property for purposes of the TRPTODA?</big>'' | |||
The "real property" that can be conveyed with a transfer on death deed includes land, buildings, fixtures, and mineral rights. | |||
A Texas TODD cannot be used to transfer "personal property" such as household items, motor vehicles, or financial assets. | |||
''<big>Can I use a Texas TODD for property located in another state?</big>'' | |||
No. The TRPTODA applies only to Texas property. Note that non-residents may use a Texas TODD for land they own in Texas. | |||
Texas residents who own real property in another state must research the law in that state to determine if it has a similar deed. | |||
<big>''Can any individual or legal entity make a Texas TODD?''</big> | |||
Only individuals (i.e., natural persons) can make a Texas TODD. Legal entities like corporations cannot use this will substitute. | |||
An individual who owns real property jointly can make a Texas TODD. However, such deeds raise some additional legal issues. | |||
<big>''What, in general terms, is the legal effect of a Texas TODD?''</big> | |||
At the owner's death, a transfer on death deed conveys the real property subject to any mortgages, liens or other encumbrances. | |||
It has no effect until the owner's death. The owner can revoke it for any reason. The owner is also free to encumber the property. | |||
A fundamental feature of a Texas TODD is that, like a will, it has no effect during the owner's life on the legal rights of any person. | |||
<big>''Does a Texas TODD affect the rights of unsecured creditors?''</big> | |||
With one key exception, no. Under the TRPTODA, the property is secondarily liable for various claims against the owner's estate. | |||
However, because the property is not deemed part of the estate, it is not liable for a [https://www.hhs.texas.gov/laws-regulations/legal-information/your-guide-medicaid-estate-recovery-program Medicaid Estate Recovery Program] claim. | |||
<big>''What are the state and federal tax consequences of a Texas TODD?''</big> | |||
A transfer on death deed has no legal effect during the owner's life so state ad valorem property tax exemptions are not affected. | |||
Property conveyed by a Texas TODD is treated the same as probate property so beneficiaries receive a stepped-up federal basis. | |||
''<big>Is a statutory Texas TODD form available for the public?</big>'' | |||
No. The transfer on death deed form enacted in 2015 was completely repealed in 2019. See [[Estates Code:Section 114.151|Section 114.151]] for the details. | |||
The legislation that repealed the statutory form also tasked the Texas Supreme Court with promulgating a new official form. | |||
The matter was delegated to a forms committee but reliable sources report that limited progress has been made at this time. | |||
A basic Texas TODD [https://texaslegalguide.com/images/Texas_TODD-free_transfer_form.pdf form] is available on this website. If you have questions or concerns about its use, [[Special:Contact/18685873|contact]] the author. | |||
''<big>What are the minimum requirements for a Texas TODD?</big>'' | |||
To be effective, a transfer on death deed must: | |||
* contain a sufficient legal description of the real property; | |||
* designate one or more beneficiaries to receive the property; | |||
* state that the conveyance will occur at the owner's death; | |||
* be in English and subscribed (i.e., signed) by the owner; | |||
* be acknowledged before an authorized officer; and | |||
* be recorded in the deed records before the owner's death. | |||
''<big>Do beneficiaries or witnesses have to sign a Texas TODD?</big>'' | |||
No. A transfer on death deed does not have to be signed by or delivered to beneficiaries and it does not require consideration. | |||
Moreover, a Texas TODD does not require the execution formalities of a will or have to be filed and proven valid in probate court. | |||
But because secrecy can create practical problems, it is recommended that the owner inform someone of the deed's existence. | |||
<big>''What is the hardest step in completing a Texas TODD?''</big> | |||
Obtaining the property description. This information is different from both the physical and the mailing address for the property. | |||
Because it is usually incomplete, do not use the description of the subject real property listed on your county property tax bill. | |||
A description is sufficient if it furnishes the means or data by which the real property may be identified with reasonable certainty. | |||
The deed will fail if the description is insufficient. If you are not absolutely sure, do additional research and/or consult a lawyer. | |||
''<big>Where can I find the required legal description of the property?</big>'' | |||
This information would be on a deed of conveyance that you received when you became an owner of the subject real property. | |||
If you did not receive such a deed or have misplaced it, the required legal description may be found in the county deed records. | |||
''<big>What types of real property description are common in Texas?</big>'' | |||
Urban property is usually described by "lot and block" (e.g., Lot 2, Block J, Section 1, of Westwood Ranch, a subdivision in ....). | |||
For an example of how that type of property description appears on an actual Texas deed, see [[Media:Sample_L&B_Description_Deed.pdf|Sample L&B Description Deed]]. | |||
Rural property is usually described by "metes and bounds" (e.g., Being 5 acres of the Jim Fox Survey, Abstract No. 234, in ....). | |||
For an example of how that type of property description appears on an actual Texas deed, see [[Media:Sample_M&B_Description_Deed.pdf|Sample M&B Description Deed]]. | |||
<big>''Who can be designated a beneficiary under a Texas TODD?''</big> | |||
There is no legal restriction under the TRPTODA on who may be a beneficiary. You can designate any individual or legal entity. | |||
But a conveyance to a minor (or other contractually incompetent person) or to multiple beneficiaries creates practical problems. | |||
''<big>Is a Lady Bird Deed the same thing as a Texas TODD?</big>'' | |||
No. A Lady Bird Deed (a.k.a. Enhanced Life Estate Deed) conveys the property interest immediately upon execution and delivery. | |||
A transfer on death deed does not convey the property interest until the owner's death. See [[Estates Code:Section 114.004|Section 114.004]] for more information. | |||
''<big>Can I sign a Texas TODD for another person using a power of attorney?</big>'' | |||
No. The owner must sign. The TRPTODA prohibits the creation of a transfer on death deed "through use of a power of attorney." | |||
The Act also provides that the capacity required to make a Texas TODD is the same as the capacity required to make a contract. | |||
''<big>How do I acknowledge a legal instrument like a Texas TODD?</big>'' | |||
To acknowledge a legal instrument, you appear before an authorized officer (e.g., a notary public) and state that you executed it. | |||
Local financial institutions normally provide notary services. A notary public may or may not be available at the county courthouse. | |||
''<big>How do I record a Texas TODD in the deed records?</big>'' | |||
File the Texas TODD in the county clerk's office of each county in which any part of the property is located. There will be a filing fee. | |||
After recording it, the county clerk's office will return the original to you. Retain it among your important papers for future reference. | |||
The transfer on death deed must be recorded in the deed records before your death. If not properly recorded, it will be null and void. | |||
''<big>Does an inconsistent will prevail over a Texas TODD?</big>'' | |||
No. And the order is irrelevant. The TRPTODA expressly states that "[a] will may not revoke or supersede a transfer on death deed." | |||
The Act provides several effective ways to revoke a Texas TODD. The most straightforward is to record an instrument of revocation. | |||
''<big>What happens if a beneficiary dies before or soon after the owner?</big>'' | |||
The answer depends on the complex interplay between the text of the Texas TODD, the TRPTODA, and general Texas probate law. | |||
By default, the real property passes according to the Texas antilapse statute if a beneficiary fails to survive the owner by 120 hours. | |||
Many of the numerous rules governing the effect of a transfer on death deed at the owner's death are subject to the text of the deed. | |||
For example, the survival rule can be modified and alternate beneficiaries can be added. See [[Estates Code:Section 114.103|Section 114.103]] for more information. | |||
''<big>What paperwork must a beneficiary record after the owner's death?</big>'' | |||
As a legal matter, none. The conveyance is automatic. But it is recommended that the beneficiary record the owner's death certificate. | |||
The beneficiary should also notify the county tax office. This will ensure that property tax statements are issued to the proper person. | |||
Note that a beneficiary is not required to accept. For various reasons, the beneficiary may choose to execute and record a disclaimer. | |||
''<big>Do beneficiaries have to wait two years before their title is clear?</big>'' | |||
For two years after the owner's death, the property is liable for various claims against the estate to the extent the estate is insufficient. | |||
Nevertheless, a beneficiary may be able to assemble information demonstrating that the estate has the assets to pay all valid claims. | |||
In that circumstance, most Texas title companies have been willing to insure transactions occurring within the two-year liability period. | |||
''<big>Should I consult with a lawyer before using a Texas TODD?</big>'' | |||
There are a variety of estate planning devices, from a transfer on death deed to a will to a trust to a life estate or a survivorship estate. | |||
Each has its own advantages and disadvantages. For example, a trust typically handles contingencies better but it is more expensive. | |||
A Texas TODD may or may not be the best choice, so you should consult with a knowledgeable lawyer before making a final decision. | |||
[[Category:TRPTODA]] | |||
[[Category:Estates Code]] | |||
[[Category:Probate Law]] | |||
[[Category:Legal Self-Help]] | |||
[[Category:By Steve Smith]] | |||
[[Category:WikiSEO Extension]] | |||
{{#seo: | |||
|title=Featured Article: Texas Transfer on Death Deed | |||
|keywords=transfer on death deed, free Texas TODD form, avoid probate | |||
|description=The article's purpose is to assist non-lawyers investigating whether a Texas TODD is an appropriate choice for them. | |||
|locale=en-US | |||
|site_name=TLG (texaslegalguide.com) | |||
|type=article | |||
|section=law | |||
|author=Admin | |||
|published_time=2018-01-15T12:30:30Z | |||
|image=TRPTODA.jpg | |||
|image_width= | |||
|image_height= | |||
|image_alt=Senate Bill 462 | |||
}} |