Texas is now among the numerous states that allow people to transfer real property to their heirs through what’s known as a “transfer on death” deed (TODD).
Whether you have a will or not, this is something that you may want to consider for your estate plans. It has the potential to make things much easier for your heirs after you are gone and accomplish your goals.
What’s a transfer on death deed?
A TODD is a quick, simple way to transfer real estate – such as your home or undeveloped land – to one or more of your heirs upon your death. Essentially, when you die, the person you name on the TODD automatically becomes the new owner of the property, without putting that part of your estate through probate.
The major advantage of this is that, with a TODD, your real property never becomes part of your estate and never goes through probate. This means that your heirs can avoid the court costs and other fees that they would otherwise have to manage. In addition, using a TODD currently puts your real estate outside of the grasp of Medicaid recovery processes.
Does a transfer on death deed limit what you can do with our property?
Because of the way that the TODD works, you retain full control of the property in question until you die. That means that you can borrow against it, sell it, change your mind about the TODD and do anything else you want with that part of your estate.
Since your heir gains no ownership rights until you pass away, a TODD is superior to merely adding an heir’s name to your deed – which would immediately give them ownership interest and (potentially) expose your property to collection efforts if they get into trouble with their creditors.
It’s important to remember that the TODD supersedes a will, but it doesn’t replace one. You have numerous estate planning options, and experienced legal guidance can help you figure out what works best for your family.