Transfer on Death Deed, Survivorship Agreements, …

1 11/16/20151 Transfer ON Death deed , Survivorship Agreements, LADY BIRD DEEDSM ichael LucksingerCounsel/OwnerHighland Lakes Title2015 TEXAS LAND TITLE INSTITUTEThe New Transfer on Death deed Statute Senate Bill 462 Effective Sept 1, 2015 Creates New Texas Estates Code Ch 114 Now more than 25 states with a TODD Part of increase in self-help legislation2015 TEXAS LAND TITLE INSTITUTE11/16/20152 TODD Statute Provisions to Note Optional Form in Statute with specific instructions for completion & revocation TODD must state Transfer to designated beneficiary occurs at owner s Death Must be signed in presence of a notary Revocable regardless of contrary provision in the TODD or another instrument Must be recorded before owner s Death in county records Effective without notice to or acceptance by beneficiary2014 TEXAS LAND TITLE INSTITUTETODD Statute

2 Provisions to Note May NOT be created using a power of attorney Revoked by revocation filed in county records or by creating and filing a TODD with different beneficiaries A will may not revoke or supersede a TODD TODD is a non-testamentary instrument. Capacity to make or revoke same as a contract For a TODD signed by joint owners, a revocation by one joint owner affects only that joint owner s interest2014 TEXAS LAND TITLE INSTITUTE11/16/20153 TODD Statute Provisions to Note A TODD does NOT: Affect an owner s right to sell, Transfer , encumber the property Affect creditor s rights to the property Trigger a due on sale clause Affect homestead rights Override a joint owner right of Survivorship agreement Invoke statutory real estate notices or disclosures Subject the property to claims of a beneficiary s creditors2014 TEXAS LAND TITLE INSTITUTETODD Title Insurance Issues Underwriting Requirements.

3 Confirmation the TODD filed before the owner s Death Closely review any divorce of a TODD owner and that divorce decree or notice of decree was filed in county records before the owner s Death If owner s estate probated, to check will for bequest of the property to another beneficiary If sale by beneficiary within 2 years after owner s Death to confirm payment of estate debts A title policy may not be issued to a TODD beneficiary2014 TEXAS LAND TITLE INSTITUTE11/16/20154 TODD Beneficiary Disclaimer Disclaimers- The interest of the designated beneficiary may be disclaimed as provided by Ch 122 of the Estates Code, and recorded in the county records per Texas Property Code (c)(2)

4 2014 TEXAS LAND TITLE INSTITUTETODD Statute Provisions to Note Effective on the Death of an owner- The TODD transfers title to the designated beneficiary if the beneficiary survives the owner by 120 hours For multiple beneficiaries- the interests pass in undivided shares, and if one beneficiary dies, the deceased beneficiary s share lapses The TODD transfers the owner s title without covenants of warranty of title even if the TODD contains a contrary provision2014 TEXAS LAND TITLE INSTITUTE11/16/20155 Questions Concerning Use of a TODD Convey interests other than fee simple? Can minor children be named as beneficiaries? Can a charity or trust be named as beneficiary?

5 What happens if owner names another beneficiary in the owner s will? Can a beneficiary include the TODD property in their will? Can a TODD create restrictive covenants or easements?2014 TEXAS LAND TITLE INSTITUTEThe TODD v. the Lady Bird deed Origin and purpose of a Lady Bird deed (LBD) TODD statute (b) specifically provides that property conveyed by a TODD is not considered property of the owner s probate estate for any purpose including Texas Govt Code (Medicaid Estate Recovery Program) If owner NCM, then can still use the LBD Questions regarding continuation of title insurance coverage of the TODD v. the LBD2014 TEXAS LAND TITLE INSTITUTE11/16/20156 Survivorship Agreements for Joint Owners Rights of Survivorship between joint owners may be accomplished by a written agreement between the joint owners in accordance with Texas Estates Code.

6 Different for married couples owning community property. Spouses must comply with Texas Estates Code Chapter 112 Revocation must be by all joint owners or as provided in the agreement Title Insurance Issues may still be encountered2014 TEXAS LAND TITLE INSTITUTEP assing Title by Use of a Trust Well accepted practice to use an inter vivos trust agreement to hold and pass title to real estate at Death to trust beneficiaries Standard warranty deed normally use to Transfer title to the trust (if homestead, reserve rights & exemptions) Title insurance issues- Coverage continued under (g) of the Texas Title Insurance Act Underwriting requirements are fairly standard among title insurance underwriters2014 TEXAS LAND TITLE INSTITUTE