Transfer on Death Deeds Part 3

This is part three of a three part series on Transfer on Death Deeds. In part one, we learned about what a Transfer on Death Deed was and how a person could validly create one.  In part two, we learned about what happens after a grantor signs a Transfer on Death Deed but the grantor is still alive.  Part three will explain what happens after a grantor of a Transfer on Death Deed (TDD for brevity) passes away.

When a grantor passes away, there is a mandatory statutory waiting period of 120 hours or five days until the beneficiary can take the property.  The beneficiary must not pass away during this waiting period, or the transfer will lapse.  When the the transfer lapses, the property will become part of the grantor’s estate, unless Texas’s anti-lapse statute applies or the grantor has named an alternate beneficiary.  Texas’s anti-lapse statute provides that if the beneficiary is a descendant of the grantor or the grantor’s parent’s then the descendant’s of the beneficiary take the transfer.  If not, the gift lapses and becomes part of the estate of the grantor. 

If the TDD names an alternate beneficiary, then the alternate beneficiary will take property named.

What if a beneficiary does not want to accept the transfer?  In Texas, the beneficiary has the right to disclaim the transfer.   A valid disclaimer must be submitted within a certain time period, so consult an attorney about how to file a valid disclaimer.

Real property transferred under a TDD is not normally subject to creditors’ claims against the grantor’s probate estate.  However, if the grantor’s probate estate lacks funds to cover the claims of creditors, estate tax, a family allowance, etc., then the property transferred remains the subject of a probate proceeding.

Speak with a qualified Wills and Estates or probate attorney if you are thinking about pursuing a TDD.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  Author Matthew Grimshaw is an attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.

NOTE: Information for this blog series was gathered from reading the Texas Estates Code Section 114 and from the Estate Planning Developments for Texas Professionals, Frost Bank October 2016 Newsletter, written by Gerry W. Beyer.