Originally published by Rania Combs.
The deed works like a beneficiary designation on a bank account or an insurance policy. It allows you to name a primary and contingent beneficiary who will inherit your real property after you die.
This is good news for many Texans with modest estates whose only probate asset is their home.
Below are a few things you need to know about the Texas Transfer on Death Deed.
The Requirements of an Effective Transfer on Death Deed
To be effective, the deed must:
- Contain the essential elements and formalities of a recordable deed in Texas;
- It must be in writing
- Contain the legal description of the property
- Include the Name and Address of the designated beneficiary or beneficiaries
- Be signed by the Grantor (the property owner) in the presence of a Notary Public
- State that the transfer of the Grantor’s interest to the designated beneficiary will not occur until the Grantor’s death; and
- Be recorded before the Grantor’s death in the deed records in the county clerk’s office of the county where the real property is located.
Is Delivery and Acceptance of the Deed Required?
The statute specifically states that notice or delivery to or acceptance of the deed by the designated beneficiary is not required.
Can I Revoke a Transfer on Death Deed?
Yes. A Transfer on Death Deed is completely revocable during the life of the Grantor. The Transfer on Death Deed can be revoked in one of the following ways:
- By signing a new Transfer on Death Deed that expressly revokes the prior one or specifies that the property should pass to someone else;
- By signing a separate document that expressly revokes the prior Transfer on Death Deed. Note, however, a Grantor cannot revoke a Transfer on Death Deed by making a contrary provision in a Will.
The revocation must be signed and notarized by the Grantor and recorded before the Grantor’s death in the deed records of the county clerk’s office of the county were the deed being revoked is recorded.
Additionally, if a Grantor is divorced after he signs a Transfer on Death Deed naming his spouse as the designated beneficiary, a final judgment of the court dissolving the marriage will operate to revoke the transfer on death deed as to the divorced spouse if notice of the judgment is recorded before the Grantor’s death in the deed records in the county clerk’s office of the county where the deed is recorded.
Can Transfer of Death Deed be Created Though Use of Power of Attorney?
No. An agent acting under a power of attorney cannot create a Transfer on Death Deed.
How Does the Beneficiary Get Title to the Property after the Grantor Dies?
After the Grantor dies, a certified copy of the Grantor’s death certificate should be filed in the county clerk’s office of the county where the deed was recorded. Filing the death certificate in the property records serves as a link in the chain of title to show has been transferred to the beneficiary.
Title is transferred to the beneficiary subject to all mortgages, liens, judgments, and other encumbrances. The beneficiary does not take the property free and clear.
A Caveat
Texas recognizes that the use of Transfer on Death Deeds may affect the ability of the decedent’s creditors to recover what is owed to them. Therefore, the statute specifies that to the extent a Grantor’s estate is not sufficient to the pay the debts of the estate, related taxes, or allowances to the Grantor’s family, the personal representative of the estate can enforce liability against the real property that was transferred by a Transfer on Death Deed as if it were part of the probate estate.
The personal representative must initiate a proceeding to enforce a liability within 90 days after he receives a demand for payment; otherwise, a creditor, an heir of the estate, a surviving spouse, a representative of a minor child or adult incapacitated child, or any taxing authority can initiate a court proceeding to enforce the liability. This means that title to the property could potentially be unsettled until the claims period has expired, which may make some title companies reluctant to clear title during the claims period without a court proceeding. In contrast, filing a probate action can significantly reduce claims period against the estate.
A Transfer on Death deed can be a cost effective way to transfer property at death without the need for probate. However, it is not a substitute for a Will or the advice of an attorney. Talk to your attorney about whether a Transfer on Death Deed is right for you.
Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.
from Texas Bar Today http://ift.tt/1KVEndS
via Abogado Aly Website
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