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What are transfer on death deeds?


Probate is a legal process that addresses collecting a deceased person’s assets, paying off their debts and distributing the remaining assets to those outlined in the person’s will. This process can take months to years depending on the size of the deceased person’s estate. Texas allows transfer on death deeds that many people have sought out using to avoid the probate process.

Hesitation on writing title insurance

This new type of deed has only been around since 2015, which has created a lot of chaos with title agencies. Many title companies are refusing to write out title insurance for a minimum of two years after the deceased person’s death. Without proper title insurance, the beneficiary of the property is unable to refinance or even sell the property. This is creating two major issues for beneficiaries who just don’t know what to do with the properties.

These don’t account for previous debts

While having ownership of a property transfer directly to a beneficiary without going through the probate process may seem like a good idea, it doesn’t address the deceased person’s debts. The whole point of the probate process is to ensure that the deceased person’s debts are paid off with their assets before distribution happens.

When a transfer on death happens, all previous tax liens, judgments, mortgages and other debts are not paid for. This transfers the need to pay for these things to the beneficiary of the property. Without the ability to sell the property to get the funds to pay off the liens, many beneficiaries are finding themselves in hot water with their credit.

While Texas is paving the way with the transfer upon death deed, it has many hiccups that still need to be worked out. As more people deal with these estate planning tools, lawmakers will be able to discover where the problems are with the law. Only then will lawmakers be able to institute better laws to ensure that all parties of the transaction are not financially ruined from the transfer of property. An individual with more questions about this issue may want to turn to an estate law attorney.