Transfer on Death Deed – Questions Part 3 of 3

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Transfer on Death Deed – Questions Part 3 of 3

How Does the Beneficiary Get Title to the Property after the Grantor Dies?

After the Grantor dies, a certified copy of the Grantor’s death certificate should be filed in the county clerk’s office of the county where the deed was recorded.  Filing the death certificate in the property records serves as a link in the chain of title to show has been transferred to the beneficiary.

Title is transferred to the beneficiary subject to all mortgages, liens, judgments, and other encumbrances. The beneficiary does not take the property free and clear.

A Caveat

Texas recognizes that the use of Transfer on Death Deeds may affect the ability of the decedent’s creditors to recover what is owed to them. Therefore, the statute specifies that to the extent a Grantor’s estate is not sufficient to the pay the debts of the estate, related taxes, or allowances to the Grantor’s family, the personal representative of the estate can enforce liability against the real property that was transferred by a Transfer on Death Deed as if it were part of the probate estate.

The personal representative must initiate a proceeding to enforce a liability within 90 days after he receives a demand for payment; otherwise, a creditor, an heir of the estate, a surviving spouse, a representative of a minor child or adult incapacitated child, or any taxing authority can initiate a court proceeding to enforce the liability. This means that title to the property could potentially be unsettled until the claims period has expired, which may make some title companies reluctant to clear title during the claims period without a court proceeding.   In contrast, filing a probate action can significantly reduce claims period against the estate.

Is it necessary to have a Will if you have a Transfer on Death Deed?

Yes. Everyone needs a Will because you may have probate assets other than your real property and there is always a possibility that beneficiaries you name in your Transfer on Death Deed will die before you or at the same time as you.

For example, suppose Jill has two adult children, Jack and Annie. Jill creates a Transfer on Death Deed naming Jack as the primary beneficiary of a piece of property and Annie as the alternate beneficiary.

One holiday weekend, Jill, Jack and Annie decide to go to the beach together. On the way there, they are involved in a tragic accident that kills all of them. Without a Will, Jill would lose the power to decide what will happen to that property and any other property she may have owned.

A Transfer on Death deed can be a cost effective way to transfer property at death without the need for probate. However, it is not a substitute for a Will or the advice of an attorney. Talk to your attorney about whether a Transfer on Death Deed is right for you.