September 1st 2015. Probate died. Well. It’s breathing heavy.
And no one seemed to notice!
Let me explain . . .
When you die, someone has to deal with your “stuff.” That usually means someone hires a lawyer and goes down to the courthouse to open a Probate to get authority to sell the stuff leftover such as a house, car, etc.
A lot of people have a house, car, maybe some bank accounts or investment accounts, insurance policy.
Insurance – easy! Just put down someone as a beneficiary and they get it. No courthouse trip needed here.
Bank accounts – no need to probate if you name a “payable on death” person. Someone who gets the account when you croak.
Investment accounts – for those stocks perhaps – like insurance you can simply designate a beneficiary. No problem.
Car – this can be easy sometimes thanks to dmv.org, just do the affidavit and your good. Maybe.
What about the HOUSE? Yep, you get to hire a lawyer. At least, you used to need a lawyer. Before 9-1-2015.
Wonder why everything has a beneficiary designation except real estate? So did the State of Texas! On September 1st, they passed a law allowing a beneficiary designation on your house.
Very cool! It’s called a Transfer on Death Deed. You file a deed which designates a person to own the home when you die. (Need a lawyer here, but a heck of a lot cheaper than probate)
Wait, BS, what’s the catch?
Ok, here’s the scoop:
- It’s New. That’s maybe not good. Not beaten up by experience, lawyers, trial and error, etc. Scary? Hmmm. You decide.
- Creditors can come get it! If you owe a lot of money to creditors, those creditors would normally go to probate, but since no probate, they have the right to go after the house even though it transferred to a new person (for 2 years) Might be tough getting title insurance for the new owner. Oops. New person gets the house and the burdens on the house like this. Don’t forget the mortgage too.
- Dead person got the house! If the lucky person who was supposed to get the house dies before you do, well, that’s a problem potentially.
So who is it good for?
- Someone without any significant debts such as credit cards, or at least leaves enough cash to pay off those creditors so they don’t go after the house.
- Someone who will take the house happily and not want to sell it for a couple of years. Like your spouse perhaps.
- Someone who really doesn’t need a probate otherwise.
But! Whatever you do, have a will. Whether you use a Transfer on Death Deed as part of the plan, a will is a badly needed document to save your heirs a lot of hassle. Especially if the Transfer on Death Deed causes problems.