A Transfer on Death Deed or “TODD” is a legal document that transfers an owner’s interest in real property, or real estate, to someone else upon the owner’s death. To be valid under Texas law, a Transfer on Death Deed must be in writing, signed by the property owner, notarized, and recorded in the county property records prior to the property owner’s death.
At the death of the property owner, real estate subject to a recorded Transfer on Death Deed passes to the person so designated on the deed (the “beneficiary”) outside of probate. Therefore, the provisions of a Will or Trust have no effect on a Transfer on Death Deed. A Transfer on Death Deed does not give the beneficiary under the deed any interest in the property during the property owner’s lifetime. Therefore, a beneficiary’s creditors can have no interest in the property during the property owner’s lifetime. A transfer on death deed does not affect any liens or mortgages on the property or the property owner’s ability to subject the property to a lien or mortgage. Thus, when the property owner dies, the real property passes to the beneficiary under the deed, subject to any pre-existing liens or mortgages.
The beneficiary of a Transfer on Death Deed must survive the property owner by 120 hours to receive the property. A Transfer on Death Deed can also list a contingent beneficiary, who is the person that would receive the property if the primary beneficiary does not survive. Additionally, a property owner can designate multiple beneficiaries under a Transfer on Death Deed. However, Texas law does not provide for unequal shares under a Transfer on Death Deed. Therefore, if multiple beneficiaries are named on a Transfer on Death Deed, the beneficiaries will own an undivided equal share of the real estate at the death of the property owner.
Because a Transfer on Death Deed does not transfer any interest during the property owner’s lifetime, the deed can be revoked at any time during the property owner’s lifetime. However, revocation of the Transfer on Death Deed must also be in writing, signed, and recorded in the same county property (deed) records as the original deed. A Transfer on Death Deed can also be revoked by a subsequent Transfer on Death Deed that states an intent to revoke the prior deed and that follows all the same writing and recording formalities as the first Transfer on Death Deed.
A Transfer on Death Deed can be a useful tool for a person who wants to transfer real estate while “avoiding” the probate process. However, there are many rules that must be followed to make a valid Transfer on Death Deed. Additionally, Texas law places limitations on how a Transfer on Death Deed can be used. Therefore, you should consult with an estate planning attorney about whether a Transfer on Death Deed can accomplish your individual estate planning goals. An estate planning attorney with Law Office of Adriane S. Grace, PLLC can also assist with drafting a valid Transfer on Death Deed and with making sure the Transfer on Death Deed is signed, notarized, and recorded in accordance with Texas property laws.
