Using Deeds in Texas Estate Planning
Determining how to effectively pass on real estate from one generation to another is an important part of many estate plans. While there are a few ways to transfer real estate, deeds are commonly used to transfer real estate between family members. However, when it comes to estate planning and using a deed to transfer an interest in real estate, there are important considerations that must be addressed. At the Houston estate planning law firm of McCulloch & Miller, PLLC, our team of attorneys have decades of combined experience developing custom-tailored solutions to meet our clients’ diverse needs. We will work with you to identify all of your options, advise on each, and help you pursue your chosen course of action.Types of Deeds in Texas
Simply put, a deed is a legal document that transfers ownership of property, in this case, real estate, between parties. Deeds may be preferable to leaving real estate in a will because transfer through a deed typically removes the property from the probate process. This can save your loved ones both time and money.
In the context of estate planning, there are a few types of special deeds that can be used to accomplish specific goals.Transfer on Death Deed
A transfer on death deed (TODD) allows you to transfer your real estate interest to someone else upon your death. You (the owner) must sign and file a TODD in the county where the property is located for it to be effective. Transfer on death deeds are appealing to many because they are straightforward. However, one drawback to TODDs is that they cannot be used to shield your interest from creditors. Once the transfer of ownership takes place, any mortgage, lien, or judgment against you transfers with the property, becoming the responsibility of the new owner. Additionally, TODDs cannot be signed by an existing power of attorney.Life Estate Deed
A life estate deed allows you to transfer ownership of real estate immediately while giving you the right to a life estate on the property. This enables you to transfer real estate out of your name while still deriving benefit from the property during your life. However, you will remain responsible for any maintenance costs, including mortgage payments and taxes. Additionally, you cannot sell the property unless all beneficiaries give their consent. This deed may also trigger some tax or gift penalties. We advise you to seek an experienced estate planning attorney prior to filling out this paperwork.Lady Bird Deed
A Lady Bird deed (LBD) allows you to arrange for the transfer of your real estate interests at your death while reserving a life estate for yourself. However, unlike a life estate deed, a Lady Bird deed also allows you to use the property however you like during your life, meaning you can lease, mortgage or even sell the property. When you die, if you still own the property, it will then transfer to the beneficiary you named in the deed, avoiding probate as well as decreases the chance for any Medicaid state recovery if the owner received Medicaid benefits during their lifetime.
Of course, there are other types of deeds that come into play during the estate planning process; these are just the most common. It is important to note, however, that you can only transfer your own interest through a deed. Thus, if you own property with another person, a deed will not transfer full ownership of the property to your named beneficiary. Additionally, to the extent that a deed conflicts with a last will and testament, generally, the deed will be given effect. If you have questions about how to transfer property through a deed, contact an experienced Houston estate planning attorney for assistance.Are you Considering Transferring Property Through a Deed?
If you have an interest in real estate and are considering a deed to transfer ownership now or in the future, it is essential that you reach out to the Houston estate planning attorneys at McCulloch & Miller, PLLC. At McCulloch & Miller, PLLC, we have more than 35 years of experience helping individuals and families devise effective estate planning strategies to accomplish their goals through deed, trusts and other estate planning tools.
We offer consultations to all prospective clients, during which we will answer your questions in clear, understandable terms. To learn more, and to schedule your consultation today, call 713-333-8900 or contact us through our online form.