Texas Transfer on Death Deed

In 2015, the Texas Legislature created the new Chapter 114 of the Texas Estates Code to allow Transfer on Death Deeds.  The new section further provides for a statutory form to allow individuals to transfer an interest in real property to one or more beneficiaries at death.  Note, the statute provides that the Transfer on Death Deed is not a warranty deed. However, it does appear that the Transfer on Death Deed will pass the transferor’s title at death as a non-probate disposition and will shelter the property from the Medicaid Estate Recovery Program.

Note, Texas still recognizes the Enhanced Life Estate Deed otherwise known as the “Lady Bird Deed.”  The Lady Bird Deed can be created as a general warranty deed.  The Lady Bird Deed also passes as a non-probate asset and will shelter the property from the Medicaid Estate Recovery Program.

It appears that the basic difference in the two concerns title insurance and title issues.  In effect, if there are known issues regarding title and you have title insurance then a Lady Bird Deed drafted as a General Warranty Deed may be used.  When there are no title issues a Transfer on Death Deed may be used.  Of course, you should review your legal situation with a licensed Texas attorney.

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