Creating an estate plan isn’t just for the rich and famous. Every individual should have an estate plan that fits his or her specific needs. This includes planning for future incapacities with a financial power of attorney, a medical power of attorney and a directive to physicians (often known as a living will). Estate planning also involves making a plan to distribute your assets upon your death. The most common planning technique for your assets is a Will.
However, there are some lesser-known estate planning techniques that may be appropriate for your situation. For instance, one little known and rarely discussed technique is a transfer on death deed. You may be asking yourself right now, “Isn’t that what my Will is for?” Yes, your Will should address property ownership but in estates with limited assets, this deed may allow you to bypass probate altogether. But the follow-up questions are likely “Why would I need to designate my spouse as owner of the property after my death? We bought this house together, so when I die doesn’t it automatically become all his?” The short answer is no.
Texas is a community property state. This means any property purchased during the marriage, no matter how it is titled, results in each spouse owning an undivided one-half interest in the property. So when you buy a house with your husband, you and your husband each own 50% of the house. Each spouse, therefore, has a right to dispose of his or her 50% of the community property in whatever way he or she sees fit. Often this means leaving your half of the community property house to your spouse, but that isn’t always the case.
If you DO want your spouse to inherit your share of the community property home after your death, Texas allows you to file a transfer on death deed that will effectively transfer title of the property to the surviving spouse when the first spouse passes without having to go through the probate process. If you are not married or would rather leave your share of the community property to another individual such as a friend, child or parent, the transfer on death deed will also accomplish your goals. The requirements for creating this type of deed are strict but if all the requirements are met, title to the property will automatically transfer to the designated beneficiary upon your passing. For a nominal fee, you may be avoiding a longer and costlier probate process – especially if your house or other real property is the only asset that requires probate action.
An estate plan is more than just a Will. Estate planning attorneys have an arsenal of tools at their disposal to help craft an estate plan to fit your needs and desires.