In 2015, the Texas Legislature enacted a statute authorizing Transfer on Death Deeds (“TODD”). Similar to Lady Bird Deeds, which are a creature of common law, TODDs operate to convey real estate upon a person’s death without the necessity of court approval or probate.
This post contains answers to commonly asked questions regarding TODDs, how they affect your property rights, and what future steps are needed to transfer the property after death.
- If I file a TODD, how does it affect my property rights during my lifetime?
A TODD doesn’t transfer property until after your death and doesn’t affect your property rights during your lifetime. You may sell the property, use it as collateral, get property tax exemptions, maintain all homestead rights, and enjoy all other property rights you currently have.
- What happens if I sell the property that is in the TODD?
If you sell the property before your death, the TODD becomes void, as if the deed never existed. The named beneficiaries cannot prevent you from selling or encumbering it during your lifetime.
- What happens if my will conflicts with the TODD?
A TODD trumps a will. Even if you have a will that gives the property to someone else, the TODD will control, and the beneficiary named in the TODD will get the property, regardless of what your will says.
- What if I change my mind about who should get the Property?
A TODD is fully revokable. If you change your mind about who you want to receive the property, you may either cancel the TODD or file an updated TODD. Whichever option you choose, it must be filed in the county’s property records before your death for it to revoke the conveyance. In addition, if there are two Grantors on the TODD, both Grantors must revoke it. If only one Grantor makes a revocation, he/she is only revoking the TODD as to his/her share of the property. The last surviving joint owner may revoke the TODD after the death of the first Grantor.
- Does the TODD protect the property from creditor claims?
No. You may use a TODD even when there is a lien on the property, but your beneficiary will take the property subject to all mortgages, liens and claims and will be responsible for paying debts on the property. Also, to the extent the Grantor’s estate is insufficient to satisfy a claim against the estate, the personal representative of the estate may enforce that liability against the property transferred at the Grantor’s death by a TODD to the same extent the personal representative could enforce that liability if the property were part of the probate estate.
- What if the beneficiary of the TODD dies at the same time as the Grantor or doesn’t want the property?
The TODD beneficiary must survive the Grantor by at least 120 hours. If not, the property is treated as if the TODD did not exist. Also, a designated beneficiary may disclaim all or part of the designated beneficiary’s interest if he/she doesn’t want the property.
- What if the Grantors get divorced?
If a marriage between the Grantor and a designated beneficiary is dissolved after a TODD is recorded, a final judgment of a court dissolving the marriage will revoke the TODD to that beneficiary if it is recorded in the county’s deed records before the Grantor’s death.
- How do we complete the transfer when a Grantor dies?
The TODD becomes effective if/when it is recorded in the county’s deed records before the Grantor’s death. However, legal title does not transfer to the beneficiaries until the Grantor dies and an Affidavit of Death is recorded with the county clerk where the property is located. The beneficiary may also have to provide acceptable proof of death to the title company before the property can be sold or used as collateral.
In short, TODDs can be a good probate avoidance tool for certain estates, but they should not be used lightly. Before filing a TODD, always consult your estate planning attorney to make sure it is consistent with your other planning.
At Thrash, Carroll & Vanway Law Group we have been advising central Texas families with wealth and new, relocating couples for over 25 years. If you would like to learn more about your property and the planning opportunities take advantage of our complimentary initial consultation by calling 512.263.5400 or contacting info@TCVLaw.com.