Probate is a legal process for transferring the assets—including real estate—of a deceased person. Probate is required regardless of whether you have a valid will. If your Texas real is included in your probate estate, chances are that some sort of legal proceeding will be required to transfer the property after your death.
As a general rule, the probate estate includes all assets that do not pass automatically to someone else at your death. Most titled assets are part of the probate estate unless they pass automatically to someone else when you die.
Many people want to avoid the hassle and expense of Texas probate. The key to keeping real estate out probate is to ensure that it passes automatically to someone else when you die. In Texas, several deeds can help you avoid probate. These deeds include three estate planning deeds—a traditional Life Estate Deed, a Lady Bird Deed, and a Transfer-On-Death Deed—that only become effective at death.
Probate avoidance can also be achieved with deeds that transfer interests during your lifetime. Lifetime transfers using deeds to living trusts and deeds with right of survivorship can also be used to avoid probate. These deeds may use any of the warranties of title, including quitclaim or deed without warranty and special or general warranty.
Texas Life Estate Deed
A Life Estate Deed designates someone to receive property at the death of an owner. The person who owns the lifetime interest is called a life tenant, and the person who inherits the property at the death of the life tenant is called a remainder beneficiary. You can read more about life estate deeds in What is a Life Estate? Explanation of Life Estate Deeds.
Traditional life estate deeds give the remainder beneficiary immediate ownership rights. This creates problems when the person who created the deed wants to sell the property or changes his or her mind. Because of these concerns, traditional life estate deeds are not usually the best strategy for avoiding probate. But many problems with traditional life estate deeds can be addressed by Lady Bird deeds and Transfer-On-Death Deeds, each discussed below.
Texas Lady Bird Deed
A Lady Bird Deed is a special form of Life Estate Deed. Unlike traditional life estate deeds, a Lady Bird Deed does not give the remainder beneficiary immediate ownership rights. Instead, the person who creates the deed retains the right to sell the property and spend the proceeds with no liability to the remainder beneficiary. This allows the current owner to maintain control during his or her lifetime and avoid probate at his or her death. See Texas Lady Bird Deed for more information about Texas Lady Bird Deeds.
Texas Transfer-On-Death Deed
The Texas Transfer-On-Death Deed works the in much the same way as a beneficiary designation on a bank account. It allows an owner to designate a beneficiary to inherit the property on the owner’s death. See Texas Transfer-On-Death Deed for more information about Texas Transfer-On-Death Deeds.
Deed with Right of Survivorship
One way to avoid probate is to create a deed that transfers property to multiple owners who will hold title with right of survivorship. Right of survivorship means that, on the death of one owner, the property will pass automatically to the surviving owner or owners. There is no need to probate anyone’s estate until the death of the last owner.
Texas does not assume right of survivorship. Section 101.002 of the Texas Estates Code provides:
EFFECT OF JOINT OWNERSHIP OF PROPERTY. If two or more persons hold an interest in property jointly and one joint owner dies before severance, the interest of the decedent in the joint estate: (1) does not survive to the remaining joint owner or owners; and (2) passes by will or intestacy from the decedent as if the decedent’s interest had been severed.
This means that, by default, individuals who own real estate together are presumed not to hold title with rights of survivorship. Under this default rule, probate is always required. Thankfully, though, Texas law allows property owners to opt out of the default rule. The specific authorization is found in two separate provisions. First, Section 111.001 of the Texas Estates Code provides an exception for owners other than spouses. That section provides:
RIGHT OF SURVIVORSHIP AGREEMENTS AUTHORIZED.
(a) Notwithstanding Section 101.002, two or more persons who hold an interest in property jointly may agree in writing that the interest of a joint owner who dies survives to the surviving joint owner or owners.
(b) An agreement described by Subsection (a) may not be inferred from the mere fact that property is held in joint ownership.
This means that joint owners can hold property with right of survivorship, but it requires more than being listed together on the deed. There must be a written agreement.
Spouses may also hold community property with right of survivorship under Section 112.051 of the Texas Estates Code, which provides:
AGREEMENT FOR RIGHT OF SURVIVORSHIP IN COMMUNITY PROPERTY. At any time, spouses may agree between themselves that all or part of their community property, then existing or to be acquired, becomes the property of the surviving spouse on the death of a spouse.
Section 112.052 contains several specific requirements that spouses must meet to create a right of survivorship. A community property survivorship must be in writing, signed by both spouses, and must contain certain language that clearly indicates a right of survivorship. The statute provides a non-exhaustive list of phrases, including:
- with right of survivorship;
- will become the property of the survivor;
- will vest in and belong to the surviving spouse; and
- shall pass to the surviving spouse.
As is the case with non-spousal survivorship agreements, the survivorship right will not be inferred from the mere fact that the two owners hold the property jointly or even that it is designated as joint tenancy. The deed must include explicit survivorship language and should usually be supplemented by a Survivorship Agreement.
Deed to Texas Living Trust
Probate can also be avoided by deeding the property to a living trust. A living trust is typically set up by an estate planning attorney as part of a larger estate plan. If you have a living trust, our online deed preparation software can help you title the property in the name of the trust. Simply select “trust” as the transferee of the property. Click here to create your own deed in minutes.