Transfer on Death Deed or Living Trust for Your Texas Home

Quick answer: A Texas transfer on death deed lets you name who receives your home when you die, with no change to your rights while you are alive (Estates Code Secs. 114.051 and 114.101). It is revocable no matter what it says (Sec. 114.052) and has to be recorded before your death (Sec. 114.055). A living trust costs more to set up but does more: someone can manage the property if you lose capacity, it can hold other assets, and it can set conditions on who receives what. If the house is your only concern and your family is simple, the deed may be enough for your Houston home. If you also want someone able to step in when you cannot, the trust is the stronger choice.

What is a transfer on death deed?

Sec. 114.051 says an individual “may transfer the individual’s interest in real property to one or more beneficiaries effective at the transferor’s death by a transfer on death deed.” Nothing moves while you are alive. You can still sell or borrow against the house, and you keep your rights as owner.

Sec. 114.101 spells out what the deed does not affect during your life, including the right to transfer or encumber the property, homestead rights, and ad valorem tax exemptions, including those for residence homestead, people 65 or older, people with disabilities and veterans.

What does the deed have to contain?

To be effective, Sec. 114.055 says it must:

1. Contain the essential elements and formalities of a recordable deed, except as item 2 provides.
2. State that the transfer of an interest in real property to the designated beneficiary is to occur at the transferor’s death.
3. Be recorded before the transferor’s death in the deed records in the county clerk’s office of the county where the property is located.

For most Houston homes, that means the county clerk in Harris County, though the city reaches into neighboring counties, so confirm where the property sits.

Two other rules catch people. The beneficiary does not have to be told, and no payment is required (Sec. 114.056). And a transfer on death deed may not be created through a power of attorney (Sec. 114.054). If you have already lost capacity, an agent cannot sign one for you. The capacity needed to make or revoke the deed is the same as the capacity required to make a contract.

How do you revoke one?

The deed is revocable “regardless of whether the deed or another instrument contains a contrary provision” (Sec. 114.052). The method is specific. Under Sec. 114.057, you record either a later transfer on death deed or an instrument of revocation. It has to be acknowledged by you after the acknowledgment of the deed being revoked, and recorded before your death in the same county.

Your will cannot do this. Sec. 114.057(b) says “a will may not revoke or supersede a transfer on death deed.” If your will says one thing and a recorded deed says another, the deed controls the house. A later divorce can also undo the deed as to a former spouse, if notice of the judgment is recorded before your death (Sec. 114.057(c)).

What happens when you die?

If the beneficiary survives you by 120 hours, the interest transfers according to the deed (Sec. 114.103). The beneficiary takes the house subject to the mortgages, liens and other interests on it at your death (Sec. 114.104). A mortgage does not go away. And if the estate cannot cover its claims, administration expenses or certain family allowances, the personal representative may enforce that liability against the house as if it were part of the probate estate (Sec. 114.106).

How does it compare with a living trust?

Question	Transfer on death deed	Living trust
What it covers	Your interest in real property	Any property you move into it
When it takes effect	At your death	Once signed and funded
If you lose capacity	Does nothing	Successor trustee can manage trust property
Changing it	Always revocable, by a recorded instrument	Revocable in writing, unless irrevocable
Homestead during your life	Not affected	Kept if it is a qualifying trust
Conditions on the gift	Goes to the named beneficiary	Trust terms can hold it for a child or set conditions
Signed by your agent?	No	Only if the power of attorney expressly allows it

When is the deed enough?

The deed fits best when the house is the main thing you are thinking about, you trust the people you are naming, and you are comfortable with them owning the house outright when you die. It is a short document and it leaves everything else alone. You should hear that option before anyone sells you something bigger.

When do you need a living trust instead?

A living trust is the better fit when:

• You are worried about incapacity. A deed does nothing if you have a stroke next year. A successor trustee can act under the trust’s terms, with duties under the Trust Code.
• A beneficiary should not receive property outright, such as a minor child or an adult who needs help managing money.
• You own more than the house. The deed only covers real property. Accounts and other assets need another plan, which is where a will or a trust comes in.
• You want one document to run the plan. A trust gathers everything under one set of terms, and you can change it later in writing.

If you do move the house into a trust, there is more to check, including your homestead exemption. The deed has to be right either way, and any title problem is best fixed first.

Why work with Gordon Law & Associates on your home

Attorney Pamela Y. Gordon’s practice focuses on real estate law, complex title issues, and estate planning with an emphasis on trusts. The question of deed or trust is exactly where those two meet.

Call (713) 837-7875 for a free consultation, in English or Spanish, or contact the firm.