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In 2015 the Texas legislature created a new way for people to transfer ownership of real estate at the time of their death with what is called a Transfer on Death Deed (TOD). [also see A Lady Bird Deed Protects A Home Medicaid Recovery] The way it works is that the owner of the property files a deed at the courthouse during their life time which states that upon his or her death the ownership of the property is automatically transferred to an individual or individuals named in the deed.

transfer on death deed

Photo by Scott Webb on Unsplash

There are pros and cons to passing property to others this way. On the plus side there is no need to go through the probate process to transfer ownership. If you have a properly written will, probate is very efficient in Texas, but this is even faster – just file a death certificate at deed records at the courthouse.  And for people with smaller estates whose only probate asset would be the home they live in, using this kind of a deed could prevent any need for any probate proceedings at all.

As for potential cons, one would be that if you want to have more than one beneficiary, all beneficiaries must receive an equal percentage of ownership of the property. In other words you can’t have one person get 50% and two others get 25% each. Another potential con is that since there is no right of survivorship via a Transfer on Death Deed, then if one of the beneficiaries you named dies before you, then that person’s share will not automatically go to the other surviving beneficiaries. Hence, it’s still a good idea to have a will which states where a deceased beneficiary’s share should go. Actually, unless you have a very small estate you should always have a will in place, whether you use a Transfer on Death Deed or not.

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