New Texas Real Estate Law Affects Probate and Transfers of Real Property on Death

by San Antonio Attorney

The owners of real property in Texas have gained access to an estate planning tool called the statutory transfer on death deed (TODD).  On June 17, 2015 the Texas Uniform Real Property Transfer on Death Act was signed by Texas Governor Abbot.  The law went into effect on September 1, 2015.  It governs the use of transfer on death deeds in Texas.

Texas land owners wanting a straightforward and affordable option to transfer property rights after their demise were using the Ladybird deeds instrument.  Such documents allow the land owners to document a deed transferring title to beneficiaries, but maintaining a life estate with a certain provision that allows the owners to transfer, sell, revoke, or in any other case utilize the land as they will, even without the beneficiaries’ consent.  This can be done since beneficiaries do not acquire an interest in the property as long as the owner is still alive.  Provided that the deed is legally documented while the owner is alive, the beneficiary will acquire the property after the owner passes away.  The probate won’t be necessary because the transfer happens separately from a will.

Property owners have been using Ladybird deeds since the 1980s, but the Texas law has never officially authorized such method. Following its introduction, many other states started using similar instruments.  Some of them have included the process in their state statutes.  Through this, all parties involved have greater protection under those laws, which define restriction, content, and rules related to nonprobate transfers.  Last month, Texas has formally implemented that same protection to its property owners.

Transfers on death deeds are distinct from the owner’s will.  Much like Ladybird deeds, TODDs enable owners to maintain full ownership of and power over their land throughout their lives – they can sell, rent, mortgage or otherwise use the property as they wish.  They won’t be obligated to inform the beneficiaries.

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