๐ I OWN MY HOME โ WHAT HAPPENS TO IT WHEN I DIE?
Understanding Wills, Probate & Transfer on Death Deeds in Texas
Owning a home is one of the biggest accomplishments and assets many people will have during their lifetime.
But have you ever asked yourself:
What happens to my house when I die?
Many homeowners assume that because their children already know what they want, everything will automatically work itself out.
Unfortunately, it may not be that simple.
Whether your home is completely paid for or you still have a mortgage, it is important to have a plan for what happens to your property after your death.
This section will help you understand some of your options in Texas.
๐ฉ๐ฝ EXAMPLE: SINGLE HOMEOWNER WITH ADULT CHILDREN
Let's use a simple example.
Mary is single.
She has:
โข No husband
โข No stepchildren
โข 3 adult children
โข Several grandchildren
โข Great-grandchildren
โข A home in Texas
Mary may think:
โI'm not married and my children are grown. They'll just get my house when I die.โ
That may ultimately be true in some situations, but there is more to consider.
If Mary dies without a will or another estate-planning document controlling the property, Texas law determines who inherits her probate property.
For an unmarried person with surviving children, Texas intestacy law generally passes the estate to the person's children and descendants.
That means Mary doesn't get to leave detailed instructions simply because everyone in the family knows what she wanted.
โ WHAT IF I DON'T HAVE A WILL?
Dying without a valid will is called dying intestate.
Texas has laws that determine who inherits when someone dies intestate.
This means the State of Texas isn't necessarily going to โtake your house,โ which is a common misunderstanding.
Instead, Texas inheritance laws determine who the legal heirs are.
For example, if you are single and have three surviving adult children, your children may inherit your estate under Texas intestacy laws.
But that can create another issue.
Instead of one person owning the home, multiple heirs may end up having ownership interests in the property.
Now the family may have decisions to make:
โข Will someone live in the house?
โข Will the house be sold?
โข Does everyone agree to sell it?
โข Does one child want to keep it?
โข Can that child afford to buy out the others?
โข Who pays taxes, insurance and repairs in the meantime?
This is one reason estate planning can be so important even when your children are adults.
๐ถ๐ฝ WHAT ABOUT MY GRANDCHILDREN & GREAT-GRANDCHILDREN?
This is another reason you should not assume everything will automatically happen exactly the way you want.
If your children survive you, your grandchildren generally would not simply receive an equal share alongside their living parent under the basic Texas intestacy rules.
But if one of your children dies before you, that child's descendants may potentially inherit through that branch of the family.
If you specifically want a particular grandchild or great-grandchild to receive something, putting an estate plan in place allows you to address those wishes rather than simply relying on Texas's default inheritance rules.
๐ OPTION #1 โ HAVING A WILL
A will allows you to put your wishes in writing.
For example, you may decide:
โI want all three of my children to share equally.โ
Or:
โI want my daughter to receive my house and my other assets divided among my other children.โ
Or you may want the house sold and the proceeds divided.
A properly prepared will can also name the person you want to handle your estate.
This person is generally called the Executor.
Having a will can therefore provide much more direction than simply leaving your family to figure everything out after your death.
โ ๏ธ IMPORTANT: A WILL DOES NOT AUTOMATICALLY AVOID PROBATE
This is important to understand.
People sometimes believe:
โIf I have a will, my family won't have to go through probate.โ
That isn't necessarily true.
A will provides instructions about how probate property should be handled after your death, but a will itself is not automatically a probate-avoidance tool.
That's why Texas homeowners should also understand another option:
๐ก TRANSFER ON DEATH DEED
A Transfer on Death Deed, commonly called a TODD, can allow a Texas property owner to name the person or people who will receive the owner's interest in Texas real estate after the owner's death.
When properly completed and recorded, the property interest can transfer to the named beneficiary without probate being required to transfer that real estate.
๐ HOW DOES A TRANSFER ON DEATH DEED WORK?
Let's go back to Mary.
Mary owns her home.
She wants her daughter Lisa to receive the home when Mary dies.
Mary may be able to execute and properly record a Transfer on Death Deed naming Lisa as the beneficiary.
While Mary is alive:
โ Mary still owns her house.
โ Lisa does NOT become the owner simply because she is named on the TODD.
โ Mary can continue living in her home.
โ Mary can sell the property.
โ Mary can mortgage the property.
โ Mary can change or revoke the TODD if she follows the proper legal requirements.
The transfer doesn't occur until Mary's death.
This is very different from simply adding someone's name to your deed as a current owner while you're alive.
๐ THE TODD MUST BE RECORDED
Simply filling out a Transfer on Death Deed and putting it in a drawer is not enough.
For a Texas Transfer on Death Deed to be effective, it must meet Texas legal requirements and be recorded before the property owner's death in the deed records of the county where the property is located.
This is VERY important.
If you are considering a TODD, make sure you understand the execution and recording requirements.
๐ฐ WHAT IF MY HOUSE IS COMPLETELY PAID OFF?
You can still benefit from estate planning.
In fact, a paid-off home may be one of the largest assets you leave behind.
For example:
Your house is worth $350,000.
You owe $0.
You have three adult children.
Without proper planning, your heirs may have to determine ownership and how the property will be handled after your death.
Having a will and/or another appropriate estate-planning tool can make your intentions much clearer.
๐ฆ WHAT IF I STILL HAVE A MORTGAGE?
Having a mortgage does NOT mean estate planning doesn't apply to you.
Your mortgage doesn't simply disappear because you die.
If real property transfers under a Transfer on Death Deed, the beneficiary generally receives the property subject to existing mortgages, liens and other encumbrances.
For example:
Home value: $350,000
Mortgage balance: $90,000
The beneficiary doesn't simply receive a $350,000 house free and clear.
There is still an existing mortgage obligation associated with the property.
This is why homeowners should consider the house and the debt attached to the house when making an estate plan.
โ ๏ธ A TRANSFER ON DEATH DEED DOES NOT ERASE DEBT
This is another important point.
A TODD does not magically protect a house from every creditor, mortgage or lien.
The person receiving the property may receive it subject to existing claims and encumbrances.
If you have significant debt, multiple property owners, complicated family circumstances or questions about creditors, this is a good situation to speak with a Texas estate-planning attorney.
๐ WILL vs. ๐ TRANSFER ON DEATH DEED
These documents do different jobs.
๐ A WILL
A will can provide instructions for many different assets and issues within your estate.
It can identify beneficiaries.
It can name an executor.
It can address personal belongings and other property.
But property controlled by the will may still need to go through the probate process.
๐ TRANSFER ON DEATH DEED
A TODD deals specifically with your interest in Texas real property.
It allows you to name a beneficiary who will receive that property interest at your death.
When properly executed and recorded, it can transfer that real property outside probate.
A TODD does not replace an entire estate plan.
๐จ WHAT IF MY WILL AND TODD SAY TWO DIFFERENT THINGS?
This is extremely important.
Suppose your TODD says:
โMy daughter Lisa gets my house.โ
Later, your will says:
โMy son Michael gets my house.โ
Do NOT assume the newer will automatically changes the TODD.
Under Texas TODD rules, a will does not revoke the Transfer on Death Deed.
The TODD can control the transfer of that real property.
If you change your mind about who should receive the property, the TODD needs to be properly changed or revoked according to Texas law.
๐ฅ WHAT IF I WANT MORE THAN ONE PERSON TO RECEIVE MY HOUSE?
Texas law allows a Transfer on Death Deed to name more than one beneficiary.
However, think carefully about what that means.
Leaving one house to three people can result in three people having interests in the same property.
Ask yourself:
โข Will they all want to keep it?
โข Will one want to sell?
โข Will one want to live there?
โข Who will pay property taxes?
โข Who will pay homeowners insurance?
โข Who will pay for repairs?
โข What happens if they disagree?
Sometimes โdivide everything equallyโ sounds simple until the asset being divided is a house.
This is an area where professional estate-planning advice may be extremely valuable.
๐จ๐ฉ๐ง WHAT IF ONE OF MY BENEFICIARIES DIES BEFORE ME?
Don't overlook this possibility.
Texas TODD law includes rules regarding what happens when a named beneficiary does not survive the property owner.
This is one reason you should consider alternate beneficiaries and periodically review your estate-planning documents.
Life changes.
Your estate plan should be reviewed when major changes occur.
๐ DON'T JUST TELL YOUR CHILDREN WHAT YOU WANT
You may have already told your children:
โWhen I die, this house goes to your sister.โ
Or:
โSell my house and divide the money.โ
Or:
โI want my granddaughter to have my house.โ
Those conversations are helpful.
But conversations are not a substitute for properly prepared legal documents.
Your family knowing your wishes and your family having the legal authority to carry out those wishes are two different things.
๐ก MRS GWEN'S TIP
Don't wait until you're sick or elderly to start thinking about this.
Estate planning isn't only about preparing for death.
It's about putting your affairs in order while you are able to make your own decisions.
If you own a home, ask yourself today:
Who do I actually want to receive my home?
Do my current documents make that happen?
Is my house paid off or does it have a mortgage?
Would I want one person to receive it or several people?
If one of my children dies before me, what do I want to happen to that child's share?
Do I specifically want grandchildren or great-grandchildren included?
Have I named someone I trust to handle my estate?
If you don't know the answers yet, that's okay.
The purpose of this resource is to help you understand the questions you should be asking.
โ HOMEOWNER ESTATE PLANNING CHECKLIST
โ Determine exactly how your home is currently titled.
โ Find your current deed.
โ Find your latest mortgage statement, if applicable.
โ Decide who you want to receive your home.
โ Decide what should happen if that person dies before you.
โ Review whether a Will should be part of your estate plan.
โ Learn whether a Transfer on Death Deed is appropriate for your situation.
โ Make sure any TODD is properly prepared and recorded before death.
โ Make sure your Will and TODD do not unintentionally conflict.
โ Review your beneficiary designations on your other financial accounts.
โ Tell a trusted person where your important documents are located.
โ Review your estate plan after major family, financial or property changes.
๐ TEXAS RESOURCES
๐ LEARN ABOUT TRANSFER ON DEATH DEEDS
TexasLawHelp provides information about Transfer on Death Deeds, including how they work, their limitations and forms that may be available to Texas property owners.
๐ TRANSFER ON DEATH DEED FORMS
TexasLawHelp also provides a Texas Transfer Toolkit and guided forms for qualifying situations.
โ๏ธ TEXAS ESTATES CODE
Texas Transfer on Death Deeds are governed by Chapter 114 of the Texas Estates Code.
ย
โ ๏ธ IMPORTANT DISCLAIMER
This information is provided for general educational purposes only and is focused on basic Texas estate-planning concepts. It is not legal, tax or financial advice and does not replace advice from a licensed Texas attorney.
Estate planning can become more complicated when there are multiple property owners, blended families, deceased children, minor beneficiaries, disabled beneficiaries, creditor issues, Medicaid considerations, trusts, multiple properties, business ownership or disagreements among heirs.
Before preparing or recording legal documents that affect ownership of real estate, consider consulting a qualified Texas estate-planning attorney to make sure the documents accomplish what you intend.