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Putting Your Affairs in Order

Putting Your Affairs in Order

One of the hardest things for a person to think about is their own death. We spend our lives thinking we are the leading actor in an exciting movie that will never end. Then, one day, reality comes home to roost and we find ourselves with a few short weeks or months left to live, or we simply pass in our sleep with no warning. Many of us do not prepare for our own inevitable demise, and the result is we leave our loved ones behind to deal with what can be a very frustrating probate process while still trying to cope with a tremendous loss.

This blog is an attempt to help others avoid a potentially long-drawn-out probate process focusing on three assets most of us have in our estate at the time of our death: 1. Bank Accounts; 2. Stocks; and 3. Real Property.

Bank Accounts are the easiest to address. One can go to his or her bank to fill out a form designating a person, or persons, as the Payable-on-Death-Beneficiary. Once this is done, the money in the account will no longer be considered a part of the probate estate, so it can be quickly and easily transferred to the Payable-on-Death-Beneficiary without the probate court’s approval.

Stocks are handled in an almost identical way as Bank Accounts. Simply designating an heir or heirs as a Pay-on-Death-Beneficiary will have the same effect as it does on Bank Accounts described above. This allows the Stocks to be transferred outside of probate. In both situations, the heirs just need to provide the financial institution with a copy of the death certificate and a couple forms of identification.

The more difficult asset is Real Property. A few years ago, Texas instituted a new law that allows for the transfer of Real Property using what is called a Transfer on Death Deed (TODD). The property owner simply fills out the form in the TODD tool kit per the instructions and records it with the County where the property is located. Keep in mind, if the property is located in two different Counties, then the TODD must be recorded in both Counties. The TODD has no effect while you are still alive and can be cancelled anytime you wish by executing and filing the Cancellation form provided with the TODD tool kit.

When you pass away, the property is immediately transferred to the heir or heirs designated in the TODD. All they have to do at that point is execute and file an Affidavit of Death Form that is also provided with the TODD tool kit and the property is transferred into their name. Even though this is something you can do yourself, it is advisable that you work with an Attorney to execute the TODD. That way you have someone knowledgeable to help guide you through the process.

Another benefit of executing a TODD is that it excludes the Real Property asset from Medicaid estate recovery. Owing money to Medicaid is not something a lot of people think about, but it has been a problem for many beneficiaries when dealing with a decedent’s estate.  Please keep in mind that this blog is not addressing debts of an estate or taxes in any way. This is another reason why you would want to consult with an Attorney before executing a TODD or designating a Pay-on-Death-Beneficiary for your financial accounts.

While Texas is one of the easiest states to probate in, the probate process can be extremely time-consuming and frustrating. Designating your heirs as the Payable-on-Death-Beneficiaries for your financial accounts and executing a TODD are relatively quick and easy ways to ensure that your loved ones are not left with a difficult and time-consuming probate process to deal with once you are gone.

Please do not rely on this article as legal advice. We can tell you what the law is, but until we know the facts of your given situation, we cannot provide legal guidance. This website is for informational purposes and not for the purposes of providing legal advice. 

Carl attended the University of North Texas from 2008 to 2011, where he earned his Bachelor’s degree in History (both majoring and minoring in History). Upon graduating, he worked for TRCA, Inc. in Denton, Texas as a Sr. Account Executive, where he was personally mentored by the company’s CEO. It was in this capacity that...

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