Following are instructions for completing Nolo's Texas transfer-on-death (beneficiary) deed.
You can use Nolo's Texas transfer-on-death (TOD) deed to leave real estate at your death. The real estate will automatically go to the person you named to inherit it -- the TOD beneficiary -- without the need for probate court proceedings. (Texas Estates Code sections 114.001 to 114.152.)
The process. You must sign the deed and get your signature notarized, and then record (file) the deed with the county clerk's office before your death. Otherwise, it won't be valid.
The beneficiary's rights. The person you name in the TOD deed to inherit the property has no legal right to it until your death. The beneficiary doesn't have to sign or acknowledge the deed. Of course, it's a good idea to let the beneficiary know that you've recorded a TOD deed. Otherwise he or she might not know about it, even after your death.
Earlier wills. If you have previously made a will, or a TOD deed, that leaves the property to someone, your new TOD deed will override the earlier document.
Your rights. You keep complete ownership of and control over the property while you're alive. You pay the taxes on it, and you have the same rights and responsibilities with regard to creditors as you did before making the deed. You can sell the property, give it away, or mortgage it. And because you're not giving it away now, there's no federal gift tax.
Revoking the deed. Later, if you change your mind about who you want to inherit the property, you are not locked in. You can give or sell the property to someone else, record a revocation, or record another TOD deed, leaving the property to someone else. You cannot use your will to revoke a TOD deed. If joint tenants with right of survivorship sign a TOD deed together, a revocation signed by one owner does not affect the other owner's transfer on death. The deed is considered revoked only if all the living joint tenants sign the revocation.
How ownership is transferred. At your death, ownership passes automatically to the beneficiary you named in the deed. Any mortgage or debt attached to the land goes along with it. To retitle the real estate in the new owner's name, the new owner should record a sworn statement (affidavit) and a copy of the death certificate. The process is simpler and quicker than probate.
Liability for debts after your death. If, after your death, there isn't enough money in your estate to pay your debts, creditors have two years to bring a court proceeding, seeking payment from any real estate transferred by a TOD deed. The personal representative of the estate may, however, initiate a court proceeding to resolve the claim earlier, which would allow title to the property to be settled more quickly. (See Texas Estates Code section 114.106.)
This form may be signed by just one owner or by two people who own property together. If you own the property with someone else, exactly how to proceed depends on how you and the other co-owners hold title to the property. If you don't know how you hold title, start by looking at the deed that transferred the property to you. It might say, for example, "to Joanne Hayden and Edward M. Hayden, as tenants in common." If you're not sure how you co-own the property, consult a lawyer.
Here's what co-owners need to know about making a TOD deed in Texas:
Tenancy in common. If your deed doesn't state how you own the property, you and your co-owners are presumed to own it as tenants in common unless you've agreed otherwise in writing. As a tenant in common, you can leave your interest to someone by signing a TOD deed alone. Only your interest in the property will be transferred to the beneficiary when you die. For example, if you own a house with your brother as tenants in common, you can sign a TOD deed that leaves your half-interest to your daughter. At your death, your daughter will become a tenant in common with your brother.
Joint tenancy with right of survivorship (JTWROS). If you own real estate as joint tenants with right of survivorship, and together you sign a TOD deed, then the property will go to the TOD beneficiary when the last joint tenant dies.
If you're the only joint tenant who signs and records a TOD deed, the deed will be effective only if you are the last surviving owner of the property. If you die first, the surviving co-owner(s) will own the property, and the TOD deed won't have any effect. For example, if you own a house as JTWROS with your brother, you can sign a TOD deed that leaves your interest in the house to your daughter. But if you die before your brother, he takes full ownership of the property. Your daughter inherits the house only if your brother dies before you do.
If you own property as JTWROS and you want the property to go to someone who is not the other joint tenant, you can first change the joint tenancy into a tenancy in common, by preparing and recording a deed to that effect. (You'll need a quitclaim deed or grant deed, not a TOD deed.) Then you could use a TOD deed to leave just your interest in the property.
Community property. Texas real estate acquired by a married person is generally the couple's community property, even if the deed doesn't say so. (Only married couples can hold title as community property.) You may leave your half-interest in community property by signing a TOD alone. However, if you want to name someone other than your spouse as the primary beneficiary, talk to a lawyer to be sure your spouse won't have first claim on the property anyway.
Community property with right of survivorship (CPWROS). This form of community property (which will be noted on the deed that transferred the property to you and your spouse) means that when one spouse dies, his or her half-interest in the property automatically belongs to the surviving spouse.
Texas's TOD deed is not designed to work smoothly with this form of property ownership. If you hold the property as community property with right of survivorship, you may sign a TOD deed alone, but you must name your spouse as the primary beneficiary. You can name anyone you like as the alternate beneficiary; the property will go to that person only if your spouse does not survive you.
If you and your spouse want to sign the TOD deed together, matters get more complicated. A qualified lawyer explain how the deed will work and help you prepare the documents that are right for your situation.
Trust property. If you hold real estate in a trust, you probably won't need to use a TOD deed, because trust property doesn't need to go through probate anyway. If for some reason you want to use a TOD deed instead, talk to a lawyer about your estate plan first.
You can name anyone you please to inherit your real estate -- a person, more than one person, or an organization such as a favorite charity.
More than one beneficiary. If you name more than one person, think carefully about how they will feel about owning the property together. Co-ownership is cumbersome and often causes tension. For example, one co-owner could force a sale of the property even if the other co-owners didn't want to sell.
Unlike many other states, in Texas, if you name more than one primary beneficiary, and one of them doesn't survive you, the surviving primary beneficiary(ies) will not automatically inherit the property. (Texas Estates Code section 114.103.) And alternate beneficiaries will inherit only if all of the primary beneficiaries die before you do.
To avoid confusion, if a primary beneficiary dies while you're still alive, the best thing to do is make a new deed specifiying what you want to have happen to the property.
Children under age 18. Think twice about naming a child under age 18 as a beneficiary. A child can take title to the property, but an adult will need to manage it. You may have several options for naming an adult to manage the property, including:
For more information, see Nolo's article Leaving an Inheritance for Children. If you need help setting up property management for a young beneficiary, consult a qualified estate planning lawyer.
Divorce. If you name your spouse as a TOD beneficiary, and then divorce, the provisions in favor of your former spouse will be revoked only if notice of the judgment is recorded before the property owner's death in the county where the TOD deed is recorded. (Texas Estates Code section 114.057.) You'll want to be sure that you record the notice or follow the instructions above for revoking the deed.
Accurate, plain-English legal information can help many people create useful legal documents. But general information is never a substitute for personalized advice from a knowledgeable lawyer. If you want professional advice about the best way to craft or use legal documents in your particular circumstances, consult an attorney licensed to practice in Texas.