As people begin going through the estate planning process, they quickly discover just how complicated it can be to pass your assets onto your loved ones when you are gone. For the extremely wealthy, it makes sense to set up various legal documents to ensure all of their assets are handled just how they want them. For the average person, however, this can be cost prohibitive or simply not worth the effort.
For middle-class homeowners, for example, identifying where you want assets to go can be done with a simple Will. The one big downside of this, however, is that assets in a Will need to pass through the probate courts, which can be costly and time consuming for your loved ones. To help families get through this process easier, the state of Texas recently created a new legal option known as the transfer-on-death deed.
What is a Transfer-On-Death Deed?
A transfer-on-death deed, commonly referred to as a TODD, allows a homeowner to specify who they want their home (or other real estate) to pass to upon their death. The transfer of ownership will legally take place upon the death of the current owner without any need for the property to enter the probate process.
For many families, this means that a child or other heir can almost immediately take possession of the family home and begin living in it, renting it out, or preparing it for a sale. Without this type of deed in place, the home will usually be part of the probate case, which could take several months or even longer before everything is finalized.
Restrictions on a TODD
While a transfer-on-death deed definitely makes things simpler for the family, it is not without its restrictions. TODD’s have a provision known as a claw back period. This is a two-year period of time where unpaid creditors of the deceased can demand that the property be considered as a part of the estate, and even go through probate. This is a possibility that is in place to ensure creditors will be paid what they are owned by the deceased. If the deceased does not owe anything to anyone, or other aspects of the estate can cover what is owed, however, this will not be a problem.
Who Can Benefit from This Type of Deed?
This type of deed offers many benefits to people in most situations. Anyone who is a homeowner in Texas will likely want to take advantage of this relatively simple document to help make it easier to transfer the ownership of their home. While even wealthy individuals can benefit from a TODD, they will often set up trusts or other estate planning vehicles to handle the process, which is why this option is most commonly used by all levels of the middle and lower class of residents.
Learn More Today
The transfer-on-death deed is a great option for the majority of homeowners in Texas. If you would like to learn more about what a TODD is or how they work, please contact Albright and Lumpkin to discuss this important legal option today.
Albright & Lumpkin, PC
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