Transfer on Death Deed
Effective September 1, 2015, Texas joined the growing number of states that allow owners of real estate to transfer property to their beneficiaries outside the probate process by creating a Texas Transfer on Death Deed. The deed works like a beneficiary designation on a retirement plan or an insurance policy. It allows you to name a primary and contingent beneficiary who will inherit your real property after you pass.
Pros and Cons of Transfer on Death Deed
If a loved one dies, the deceased’s estate must be probated. A Transfer on Death Deed conveys property outside of probate. Since the person conveying the property is still alive, this avoids incurring probate court costs. In addition, the person conveying the property can rescind the transfer at anytime before they pass.
One of the other great benefits of using a Transfer Upon Death Deed, besides reducing costs, is it may be used to bypass the Medicaid Estate Recovery Program. A simple will goes through probate and subjects property to being taken by the Medicaid Estate Recovery Program. Property passed on by a Transfer on Death Deed could be exempt from the Medicaid Estate Recovery Program because the transfer happens upon death and does not require probate court.
Transfer on Death Deed vs. Will
The Transfer on Death Deed does not replace a will. The will may still be an essential part of your estate plan especially if you have special wishes or a large amount of personal property. A Transfer on Death Dead covers only real property, like land and improvements, and conveys property outside of probate, which allows you to avoid court costs. It is best if your will and Transfer on Death Deed are consistent as to who receives your home and land. If your will and Transfer on Death Deed are inconsistent, the person named in the Transfer on Death Deed, not your will, will own your property after your death.
If you have questions about a Transfer Upon Death Deed make sure you use a competent Houston probate attorney. These types of deeds require special verbiage and need a professional to prepare. If you are considering a Transfer Upon Death Deed, contact one of our Houston probate attorneys for a free consultation.