Texas Probate Attorneys Giving You the Representation You Need for Transfer on Death Deeds

Real estate can be one of the most valuable assets we leave behind. This is true whether it’s a family home being passed to the next generation or a new piece of land you only recently acquired. Sometimes a family farm or ranch is a legacy passed from generation to generation, and in other families it may be a modest home that is the only asset of any value in the estate. Because of its value, it’s especially important to make sure our property is transferred according to your wishes. If someone is not careful with their will and estate, a piece of property could end up in probate or even taken by the government for taxes. If this happens, the property might be lost forever or it could be months or even years before your property is legally transferred to your heirs. You also face the risk of the property being seized during the probate process.

Fortunately, there is a method to ensure your real estate becomes the legal property of your heirs and avoids the probate process entirely. The key is careful planning with the help of an expert.

What is Probate?

Probate is the legal process of distributing a person’s assets and settling their accounts after they die. It can involve simply executing a will for a quick uncontested probate or going through a lengthier, more complex procedure if there is no will. If you leave behind a will, it will go through these steps in probate:

•       Validation by a Court
•       Approval of the Executor
•       Debt Payment, including taxes
•       Asset Distribution

If you leave a will, after you die, it must first be validated by the court. Unless one of your heirs decides to contest the will, this should be a relatively simple part of the process. Most times, there is no reason for a will to be contested. After the court validates the will, it will approve of the executor you named in it. After this, the executor will first use your assets to pay any debts, mortgages, liens, taxes, or other outstanding bills, including the court costs and expenses of administration. Once these debts have been satisfied, your assets can be distributed accordingly.

If for any reason you did not name an executor in your will, the court will need to appoint one for you. This could draw out the process even longer. When you name your own executor in Texas, you can designate them as an Independent Executor who can serve without court oversight and without posting a bond, otherwise the court will default to require those things. This is why it’s important to ensure you name an executor in your will.

Because the probate process can be so lengthy, many people use probate avoidance strategies. These are legal methods to quicken the transfer of assets after death. Using probate avoidance strategies can be especially helpful if you are afraid the probate process may take an extended period or if you have a relatively small, uncomplicated estate. Extended probate proceedings can happen if you leave behind a substantial amount of debt. It can also happen if you are not clear about your wishes for specific assets in your will, if your will is not well-written, or if it is deemed invalid or is contested. 

What Are Probate Avoidance Strategies in Texas?

Probate avoidance strategies are legal methods to make sure some or all of your assets do not go into probate. These methods are valuable for people who think they may leave behind a large amount of debt or if the estate is large enough to require payment of estate taxes. They are also valuable if you are afraid your estate might be contested. Probate avoidance strategies avoid probate by quickly and efficiently transferring your assets to another person either before or after you die, and they do so in a way that the property is not considered yours at the time of death. Some probate avoidance strategies include:

• Living Trusts

• LLCs 

• Naming Beneficiaries on Pay- on-Death accounts

• Transfer-on-Death Deeds or LadyBird Deeds

A living trust is a way to transfer responsibility of your assets to someone while you are still alive. This person is named a trustee. The trustee will become the legal guardian of the assets named in the trust. This way, when you die, they already legally control those assets. The trustee can then distribute them according to your wishes.

An LLC is a business entity, similar to a corporation, which is considered by the law as separate from its owners or members. The income tax for LLC income is taxed to the individual owners. LLCs and trusts differ in the duties and rights of the LLC members.  LLCs may have voting and nonvoting members. 

Naming beneficiaries on a financial account is another way to avoid probate. Also known as a pay-on-death account, or a right of survivorship, the named beneficiary merely shows the bank or brokerage a death certificate and ID to request that the account be turned over to them. Most joint bank accounts are set up this way, but it isn’t always the case. Beneficiaries can be named on most 401k or IRA accounts and on stock certificates. You can even put a right of survivorship on a car title. Legally, the minute the original owner dies, the ownership transfers to the named beneficiary and is not considered as ever belonging to the decedent’s estate. 

If you own any real estate, a transfer on death deed is a very valuable method to avoid probate. In essence, it puts a type of right of survivorship on real estate. It can ensure that high-value property such as a home or land will go directly to your heir and avoid possibly getting tied up in probate. 

A different but similar concept is known as a LadyBird deed or a deed retaining a life estate. These deeds will pass title to a surviving beneficiary as to only that specific real estate. Be aware that if the decedent owns other properties, whether land, jewelry, vehicles, cash, securities or whatever, those things may still have to go through probate because the deed will have no effect on other property. 

What is a Transfer on Death Deed in Texas?

A Transfer on Death Deed (TODD) is a legal document in Texas that allows someone to stipulate ownership of their property will pass to another individual after they die. It is pre-emptively deeding land and/or property to another person. As long as you are alive, you will retain ownership of your property. However, once you die, the TODD will take effect and the named individual(s) will automatically become the legal owners. A major feature of the TODD is that it is revocable during the original owner’s lifetime. The ownership does not transfer until the maker dies. In terms of unsecured creditors of the decedent and estate taxes though, the law says that the subject real estate was never a part of the decedent’s estate because the future ownership interest was given away before death.

Buildings or other real estate listed on a TODD are what is known as nonprobate property. This means it skips probate entirely. This is a valuable way to ensure that some of your most valuable assets pass quickly to your intended heir. Note that a TODD does not circumvent paying mortgages or liens on the property. Even if you transfer ownership to someone with a TODD, they will still be responsible for paying any outstanding debt related to the property. They will however be the legal owner.

A ladybird deed is similar to the TODD with the major difference being that once a ladybird deed is signed, the ownership passes immediately and the person holding the future interest cannot be forced to give it back if the maker later changes his or her mind. The LadyBird deed is not revocable by the maker although the maker still owns the property until death. However the recipient may sign a deed returning the property to the original owner either voluntarily as a gift or may be persuaded to return the future ownership interest in exchange for payment. It may interest some Texans that the LadyBird deed is so named after the nickname for a former first lady, the wife of U.S. President Lyndon B. Johnson.

Filing either a TODD or a LadyBird Deed in the county deed records is a relatively easy process although it may be difficult for a lay person to find a form for the LadyBird Deed. You will obtain a copy of your original deed and a TODD form, fill out the paperwork, sign it in front of a notary, and then file the TODD and deed with the county clerk. While the actual procedure may be simple, the paperwork can be complex.

Even a simple mistake could result in the TODD being questioned. The legal description of the property must be complete and accurate. Any error could lead to the property ending up in probate anyway or cause an expensive lawsuit later. This is why it’s important to consult an experienced estate planning and probate attorney prior to filing a TODD. Ideally, you should discuss with your estate planning attorney your reasons for wanting such a deed, your entire estate plan, and permit the attorney to draft the deed for you to make sure there are no errors.

What Should I Do if I Want to File a Transfer on Death Deed in Texas?

Real estate and other property are some of our most valuable assets. A transfer on death deed is an easy but effective way to make sure it passes to your designated heir. If you or a loved one have property you intend to leave behind after you die and want to make sure it doesn’t go into probate, don’t hesitate to contact Laura D. Heard Law Firm Inc., located at 14607 San Pedro Ave, Suite 205, Hill Country Village, TX 78232. Our attorneys are experienced in every avenue of probate law. We recognize the importance of protecting your property and making sure the right people inherit it after you pass away. We approach every case sensitively and with special care. We understand planning for the end of life can be difficult.  We also know it can be a rich and rewarding way to gain peace of mind for yourself and your loved ones. Knowing that property will pass smoothly to your heir is an excellent way to ensure your loved ones will be taken care of.

Probate can be a time consuming and emotionally draining process. It can make an already painful time more difficult and stressful. You can help ease the process for your loved ones by avoiding probate with a TODD. If you own property in Texas and want to make sure it passes easily to your heirs, call Laura D. Heard Law Firm Inc. today at 210-775-0353 or contact us for an initial consultation. Our attorneys will help you gain the security you deserve.