What Rights to Beneficiaries of Transfer on Death Deeds Have During the Homeowner’s Life?

A Texas transfer on death deed is a beneficiary designation for your home. It works like a beneficiary designation on a life insurance policy or a retirement plan. If you sign a transfer on death deed and record it before your death, your property will pass to a designated beneficiary after you die without the need for probate.

However, the transfer on death deed does vest any rights in the beneficiary during the life of the homeowner.

During the homeowner’s life, the homeowner continues to have

• the right to sell or encumber the property;
• homestead rights; and
• ad valorem tax exemptions, including exemptions for residence homestead, persons 65 years or older, persons with disabilities, and veterans.

Signing a transfer on death deed does not prevent a homeowner from changing his or her mind. At any time, the homeowner can revoke the deed or name a new beneficiary.

In other words, the existence of a transfer on death deed does not create any legal or equitable interest in favor of the beneficiary. As such, a named beneficiary cannot force the homeowner to sell the property. Also, because no interest in the property vests until after the homeowner dies, the transfer on death deed does not subject the property to claims of a designated beneficiary’s creditors.