How to Avoid Probate for Your Texas Home

For many of our Bedford clients, their home is their most valuable asset. It’s also one that families are often most concerned about after a loved one passes. But when a home is titled solely in the decedent’s name, family members may have to go through probate before they can sell, refinance, transfer, or live in the home as their own.

While probate isn’t always as difficult in Texas as it is in some other states, it often costs families time and money while stressing them out during an emotional time. If you’re trying to keep your Texas home out of probate, you have options—and the team at Hargrave Law, PC is here to help. Call us at 817-968-7191 to schedule a consultation with our estate planning lawyers.

Option 1: Use a Texas Transfer on Death Deed

A Texas transfer-on-death deed avoids probate by acting as a beneficiary designation for your home. When you have a TODD, the home conveys outside of probate. With a TODD, you maintain full control of the property. You can still choose to sell it, mortgage it, or revoke the deed if you choose. This can be helpful for those who want to maintain flexibility to sell the home if needed to cover other expenses. When you pass away, the person named on the transfer-on-death deed just has to file an Affidavit of Death, although the title company may also request a copy of the death certificate if they plan on selling the home or using it as collateral.

Option 2: Consider a Lady Bird Deed

A Lady Bird deed, also known as an enhanced life estate deed, also automatically transfers ownership of the property upon your passing. Basically, you name someone who will inherit your home. They maintain a future interest in the property that becomes possessory at death. After you create the deed, you’re still the legal owner with full control of the property. You don’t need the beneficiary’s approval to sell, mortgage, or refinance the home if you need to access extra funds. After you pass, the life estate terminates. The beneficiary automatically becomes the full owner.

This route has some tax benefits for beneficiaries, as they generally receive a stepped-up cost basis. Assume you have a home that you purchased for $150,000 but is now worth $300,000. When the home passes to the new owner, their cost basis is $300,000 instead of $150,000. If they wait a few years and sell the home for $350,000, they are taxed as if they made a $50,000 profit, not a $200,000 profit.

Option 3: Create a Revocable Living Trust

If you want to protect more than just your home from probate, consider creating a revocable living trust. This does require advance planning and work, as you have to set up the trust itself and then transfer the home into the trust. At that point, the trust owns the home. However, since the trust is revocable, you can generally make any changes to the trust without court intervention or approval.

As part of creating the trust, you name a successor trustee. Upon your passing, they immediately take control of the trust. Everything in the trust bypasses probate, as it is owned by the trust. The successor trustee then distributes your home and other trust assets to your chosen beneficiaries.

Option 4: Use Survivorship Planning Carefully

It’s common for married couples to assume that any property they own together will automatically pass to the surviving spouse when one of them passes away. However, that assumption is dangerous in Texas. If something is considered community property, a spouse continues owning their 50% when their spouse passes. The decedent’s 50% passes according to the terms of their will or Texas intestacy law. Consider how this may play out in a marriage where one spouse has children from a previous marriage. The couple assumes that their shared home will remain with the surviving spouse. When the previously married spouse passes, their share of the house passes to their children instead. This can leave the surviving spouse in an incredibly difficult position.

The key is to be intentional about your estate planning. A written survivorship agreement allows a couple to agree that all or part of their community property will become the property of the surviving spouse upon one spouse’s death.

While survivorship planning is a useful part of estate planning, it shouldn’t be the only way you protect your assets and ensure that they are distributed according to your preferences.

Know the Limits of Probate Shortcuts

Texas does have some simplified probate and post-death transfer procedures, and while they can be useful, they aren’t the same as avoiding probate through effective estate planning.

A small estate affidavit is useful in cases where someone passes away without a will, as long as their estate qualifies under Texas Estates Code Chapter 205. This does have limitations, especially when it comes to real property. Your only real property must be the homestead, and there are other limitations that may make this an unsuitable option.

An affidavit of heirship is another technique that is often recommended, but it can come with risks. Title companies may not treat an affidavit of heirship the same way they would a properly planned deed, trust, or court order.

Common Mistakes to Avoid

Wanting to avoid probate is common, but in trying to do so, people sometimes create bigger problems. They may add their child to their house deed and lose the full stepped-up basis, assume that creating a will avoids probate, not record a transfer-on-death deed prior to passing away, or use legal templates to address complex estate planning issues.

Even though Texas’s probate process is somewhat easier than what you’ll find in many other states, you can save your family time, money, and stress by bypassing it. But the easiest way to do that is to work with an experienced estate planning attorney.

Schedule a Consultation With Hargrave Law, PC

If you want to protect your loved ones from the stress of probate after you pass, we’re here to create an estate plan that meets your needs. Call us at 817-968-7191 or reach out online to schedule a consultation.