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A couple of sessions ago, Texas introduced the Transfer on Death Deed (“TODD”) Bill.

The connotation of the deed’s name may induce one to think “Lady Bird Deed,” but stop there. This vehicle to transfer title to property upon one’s death differs and provides for an easier posthumous title transfer. In practice, TODD allows a grantor to convey real property to a grantee with a caveat—that the deed only becomes effective upon the death of the grantor. TODD allows for a property owner to transfer title to a specific grantee upon the property owner’s death without the need for a probate administration or an affidavit of heirship.

TODD’s elements are much like the formalities the law requires for a valid, recordable deed: 1) It must be in writing, 2) It must contain a legal description sufficient to identify the property, 3) It must include the name and address of the grantee, and 4) It must be executed by the grantor in front of a notary public. Additionally, the language in the body of TODD must expressly state that the transfer of the grantor’s interest to the grantee will not effectively occur until the grantor’s death. Last, TODD must be recorded before the death of the grantor (in the county where the property to be conveyed is located).

With any change there are caveats to keep in mind. With respect to TODD, there are no notice, delivery or acceptance requirements on the part of the grantee. A divorce (where the decree is filed of record) will revoke TODD, but a “will” may not revoke or supersede TODD. TODD also cannot be created or revoked via power-of-attorney. Other things to keep in mind on the grantee’s side include: 1) The grantee must survive the grantor by 120 hours, 2) The grantee(s) receive equal shares, 3) The effective recording date for TODD is the date of the grantor’s death, 4) The conveyance is not considered part of the probate estate, 5) The grantee may disclaim the conveyance, and 6) Creditors of the estate of the deceased grantor have up to two years after the date of death to claim the property to satisfy any debt(s).

How is TODD affected by title insurance and underwriting guidelines? Title insurers will look to see that TODD was indeed filed before the death of the grantor. They will heavily scrutinize TODDs that involve a grantor who passed within the last two years of closing. If an existing will purports to revoke TODD, the title company will have to seek underwriting approval (remember that a will does not overrule TODD). Lastly, if TODD exists in a chain of title and a grantor (who executed a TODD) is attempting to convey a piece of property—during his lifetime, of course—TODD must be revoked by written instrument before the grantor conveys to the end buyer.