texas land title association

11/16/2015

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TRANSFER ON DEATH DEED, SURVIVORSHIP AGREEMENTS,

LADY BIRD DEEDS

Michael Lucksinger

Counsel/Owner

Highland Lakes Title

2015 TEXAS LAND TITLE INSTITUTE

The 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’ legislation


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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 beneficiary



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 interest


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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 creditors


TODD Title Insurance Issues

Underwriting Requirements:

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 beneficiary


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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 § 240.105(c)(2)



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 provision


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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?

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?


The TODD v. the “Lady Bird” Deed

Origin and purpose of a “Lady Bird” Deed (LBD)

TODD statute §114.106(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 §531.077 (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 LBD


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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 §11.001 Texas Estates Code.

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 encountered


Passing 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 §2703.101(g) of the Texas Title Insurance Act

Underwriting requirements are fairly standard among title insurance underwriters


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