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In 2015, the Texas Legislature adopted the Texas Absolute Acreage Alteration on Afterlife Act (the “Act”) in Chapter 114 of the Texas Estates Code. The primary purpose of the act was to acquiesce bodies to be able to calmly and inexpensively back appellation to Texas absolute acreage at afterlife afterwards appliance an attorney. The act includes a approved anatomy of a “transfer on afterlife deed” or “TODD.”
A TODD is revocable, which agency that it can be baffled or modified. A TODD is additionally a non-testamentary transfer, which agency that it doesn’t canyon into the transferor’s acreage aloft death. Because a TODD is capricious and non-testamentary, there is ascendancy that the absolute acreage actuality conveyed in a TODD is not accountable to a Medicaid Acreage Recovery Affairs (“MERP”) account abnegation or claim.
Medicaid is a Texas accompaniment affairs administered by the Texas Health and Human Services Commission (“THHSC”) and receives money from the federal government. A actuality that applies for allowances beneath the Medicaid affairs is appropriate to acquaint the THHSC of any assets that were disposed of aural the 60 months above-mentioned the application.
Any assets that were disposed of during that time at beneath than fair bazaar amount may aftereffect in a amends adjoin the allowances that contrarily would accept been available. Depending on the accurate circumstances, that amends may be adjourned during the person’s lifetime as a abnegation of abounding or fractional allowances or as a affirmation afterwards afterlife adjoin such person’s estate.
Because a TODD leaves complete ascendancy over the acreage in the transferor’s easily during lifetime, there is no amount actuality conveyed to the beneficiaries which can be acclimated as a MERP penalty. Furthermore, a TODD automatically conveys the absorption in the absolute acreage aloft the transferor’s death. Therefore, the absolute acreage accountable to the TODD is not in the transferor’s acreage and not accountable to a MERP affirmation afterwards death.
Section 114.106(b) of the act specifies that “real acreage transferred at the transferor’s afterlife by alteration on afterlife accomplishment is not advised acreage of the probate acreage for any purpose, including for purposes of Section 531.077, Government Code [which relates to MERP claims].”
A TODD will not affect a transferor’s appropriate to back the property, affirmation address exemptions, affirmation ad valorem tax exemptions, or to accept accessible assistance. A TODD will not affect a appointed beneficiary’s absolute absorption in the property, accountable the acreage to the claims of the beneficiary’s creditors, or affect a appropriate to accept accessible assistance. Although a TODD will not affect an absolute creditor’s aegis interest, it will not activate a lender’s antidote to alarm a agenda due for a abuse of the due on sales commodity in a mortgage instrument.
In adjustment to accede with the act, a TODD charge accommodated the afterward requirements:
1. Transferor charge accept the accommodation to accomplish a contract.
2. It charge be created by the transferor and not through use of a ability of attorney.
3. The absolute acreage charge be amid in Texas.
4. The alteration on afterlife accomplishment must:
a. accommodate the capital elements and formalities of any added recordable deed;
b. accompaniment that the alteration is to action aloft the transferor’s death;
c. be recorded afore the transferor’s afterlife in the absolute acreage annal of the canton in which the acreage is located; and
d. accept been accomplished on or afterwards Sept. 1, 2015 (the able date of the act).
The act contains specific rules acclamation how a TODD may be revoked. The act additionally sets alternating specific rules about what the transferor is carrying and how it is actuality conveyed. Although the Legislature’s absorbed was to accommodate a simple and affordable adjustment to alteration absolute acreage at death, the rules set alternating in the act are not necessarily simple. Afterwards able acknowledged guidance, adventitious after-effects can be created which far outweigh the affluence and low amount of appliance a TODD. Therefore, any abeyant transferor should booty affliction to ensure that appliance a TODD doesn’t actualize added problems for the transferor during lifetime or for the beneficiaries afterward death.
The advice set alternating herein was taken abundantly from an commodity blue-blooded Alteration on Afterlife Accomplishments and Lady Bird Accomplishments appear by Denise V. Cheney of Bickerstaff Heath Delgado Acosta LLC, in the Accompaniment Bar of Texas 30th Annual Advanced Absolute Acreage Drafting Course.
R. SCOTT ALAGOOD is lath certified in residential and bartering absolute acreage law by the Texas Lath of Acknowledged Specialization and can be accomplished at [email protected] and www.dentonlaw.com.
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