Someone’s home is their castle, their safe space and (likely) their most valuable personal property. Someone’s residence is not just a source of shelter but also a means of ensuring financial stability. The equity that someone accrues in their home can contribute substantially to their personal wealth. It could also be the biggest component of their legacy after they die.
Someone who owns real property in Texas may want to have a specific family member or beneficiary inherit the property after their passing. There are many ways to arrange for the transfer of real estate after someone dies. A transfer on death deed (TODD) is one of the more common solutions for real property when planning a personal legacy. The following are some of the benefits of using a transfer on death deed instead of a will or trust to arrange for the transfer of someone’s interest in their home.
The property can bypass probate court
A house held in a revocable trust or left to someone else in a will is part of someone’s estate. It is therefore subject to probate court oversight and could be at risk of liquidation to settle financial responsibilities. A transfer on death deed is a document that people can record without involving the probate courts. The home can transfer to a particular beneficiary without becoming part of someone’s estate.
There is minimal delay in establishing occupancy
When real property transfers as part of an estate or is subject to the management of a trust, it can take quite some time to facilitate the transfer of ownership to a beneficiary. The property could potentially sit vacant for months before someone can lawfully assume occupancy of the property. The longer a property sits vacant, the greater the negative impact the vacancy may have on its value. Additionally, there is more risk of vandalism or other property crimes. A TODD allows for a rapid transfer of ownership and therefore less downtime between occupancies.
Beneficiaries know what to expect
Family members are sometimes unclear about what their loved one actually intends for their most valuable assets. Children who lose a parent, for example, might expect that they should jointly inherit the home with their siblings. There can be confusion about the terms of an estate plan, especially if family members do not read the will before someone’s passing. A TODD typically requires signatures before someone’s passing. Therefore, the party who should inherit the home and other family members are likely aware of who the testator intends to assume ownership of the property after their death.
More valuable assets often require careful consideration when someone begins planning their estate. Drafting a transfer on death deed can be a viable solution for real property that belongs to a Texas testator.
