This is part one of a three part series that will explain: (1) what Transfer on Death Deeds are and how they are created; (2) what happens after a Transfer on Death Deed is created (when the grantor is still alive); and (3) what happens when the grantor of a Transfer on Death Deed passes away. New law was enacted in Texas in 2015 which affects all Transfer on Death Deeds created on or after September 1, 2015.
What is a Transfer on Death Deed?
A Transfer on Death Deed (“TDD” for brevity) is a document that any person, over the age of 18 and in his right mind at the time of creation, (“grantor” for brevity) can use to transfer property after grantor’s death as an estate plan technique. Any property named in a TDD, if still in the possession of Grantor at his death, will pass to the named beneficiary in the TDD, which will bee explained further in part three of this series. Alternatively, if you die with a Will, the Will must be probated and if you die without a Will, your property passes by Texas intestacy laws.
How are TDD’s created?
The TDD must be in writing; it must contain a sufficient description of the property to be transferred; and, it must be signed by the grantor. The TDD is like any other deed in that it transfers property to another person, except that it contains a specific provision that “the transfer of the property from grantor to beneficiary will occur at grantor’s death.” Without this provision, the transfer of property occurs at the time the deed is delivered and accepted by the beneficiary. Further a TDD can only be created by the grantor. A person with a valid Statutory Power Of Attorney or someone with express or implied consent from the grantor, or any proxy cannot create a TDD for the grantor. If the TDD is (1) recorded before the grantor passes and (2) is recorded in the county where the property is located, it is valid and the beneficiary need not do anything to accept it. This means the beneficiary does not need to pay consideration, does not need to accept the deed, and does not need to have possession of the deed at all.
Stay tuned for more information in part two of this thee-part series.
NOTE: Information for this blog series was gathered from the Texas Estates Code Section 114 and the article entitled Estate Planning Developments for Texas Professionals, as it appeared in the Frost Bank October 2016 Newsletter, written by Professor Gerry W. Beyer.