Pass a home as inheritance without a court order: "Transfer on Death Deeds"
Losing a loved one is one of the most challenging times in a person’s life. It not only presents emotional challenges for the bereaved, it can often present the practical challenge of dealing with the financial affairs of that loved one.
For peace of mind, everyone should have standard estate planning tools in place to avoid causing their families unnecessary expense and difficulty when they pass.
Drafting a Will is one of the top steps you should take. Wills are versatile, durable, and allow your loved ones to move through court at a much lower cost. But there extra steps you can take to help your family even more.
A Transfer on Death Deed can allow your family to avoid court entirely.
For most people, their home is the most valuable asset they own. For many, it is the only major asset passed to their heirs.
In 2015, Texas created a new tool called the Transfer on Death Deed (TODD) (written into Texas Estates Code 114). If you properly draft and file a TODD, it will allow you to name people who will receive title to your home at the time you pass without the need for a court order. Until your passing, you can always change the people named in your TODD or revoke the TODD entirely.
This has least two major advantages:
A TODD protects your home from potential confiscation by the state.
Many people receive government assistance before they pass to help pay expenses for nursing homes and/or various in-home care options. That assistance is paid through Medicaid, and after you pass, the state can make a claim on your estate for reimbursement. The process is referred to as the Medicaid Estate Recovery Program, or MERP.
When ownership of a home is transfers through a TODD, it is considered to "pass outside of probate," which means MERP has no opportunity to confiscate it. Even a Will cannot guarantee this benefit.
A TODD may allow your family to avoid going to court entirely.
Even a quick trip to court can be expensive. But if you have a TODD to pass your home to your heirs and no other major assets, then your family may have no need to visit court at all.
You might also be able to pass other assets to heirs without going to court.
You may have other assets, held by third parties, who will allow you to make a "beneficiary designation." Many banks, retirement accounts, and investment accounts will allow you to designate a person to be your beneficiary after you pass.
You don't need an attorney to help you ask a bank or other institution to let you designate a beneficiary; and if the process is successful, your beneficiary will receive thosee asset without needing to go to court. It is, however, still wise to draft a Will, because the unexpected can happen, and a Will serves as a safety net for any property that does not successfully pass to your heirs outside of probate.
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