Most people have been hounded by their financial advisor or estate planner to put beneficiary designations on their financial investment accounts. Beneficiary designations are helpful because they indicate who is to receive the funds in the account, and that person can usually collect the account simply by providing a death certificate of the deceased owner. No probate is required, so it is a quick and easy way to transfer a deceased person’s property. But beneficiary designations exist in an array of situations that you may not be aware of.
What Is a Beneficiary Designation?
A beneficiary designation names who should receive an asset when the owner dies. In many cases, the beneficiary can claim the asset without probate by presenting proof of death, making the transfer faster and simpler.
Where You Can (and Can’t) Use Beneficiary Designations
Bank Accounts (POD/TOD and Right of Survivorship)
On a cash account at your bank, the designation is more likely called a payable on death (POD) or transfer on death (TOD) designation. If you own the account with someone else, such as a spouse, then a right of survivorship (ROS or JTROS) will allow the surviving owner to claim the entire account when the other owner dies.
Note: This is not the same as having signatory authority on an account.
Automobiles (Texas DMV Forms)
The Texas DMV has promulgated a form to place a beneficiary designation on a motor vehicle (Form VTR-121). You submit this form, along with an Application for Texas Title and Registration (Form 130-U) and a fee, to your county tax assessor’s office prior to your death. Then the vehicle title will transfer to the named beneficiary at your death, without the need for probate.
Manufactured/Mobile Homes (Effective Sept. 1, 2025)
Effective September 1, 2025, you may designate a beneficiary for a manufactured home. The home must be classified as personal property; the statement of ownership must not reflect that the owner has installed the home and elects to treat the home as real property.
How It Works
- The owner must submit an application for a new statement of ownership with the beneficiary designation to occur at the owner’s death.
- The designated beneficiary has one year after the owner’s death to claim the home by submitting another application for statement of ownership to the Texas Department of Housing and Community Affairs; otherwise, the beneficiary designation will be void.
(Tex. Estates Code Chapter 116, §122.001(1), and Tex. Occ. Code 1201.2135.) Certain people are also eligible to sign a right of survivorship (ROS) agreement regarding manufactured homes. (Tex. Occ. Code 1201.213.)
Homes and Real Property (Community Property & TODD)
Yes, even a traditional home can have a beneficiary designation attached to it.
Community Property Survivorship (Married Owners)
If you are married and you purchased your home during the marriage, then the home is community property. Each spouse owns half of the home, and a deceased spouse’s half does not automatically pass to the surviving spouse, as some people believe. However, it is possible to file a Community Property Survivorship Agreement in the deed records, which states that, if one spouse dies, the other spouse is to own the entire property.
Transfer on Death Deed (Single Owners or Others)
A single homeowner may pass the home outside of probate by signing and filing a Transfer on Death Deed (TODD). After the owner’s death, the named beneficiary files an Affidavit of Death in the property records and, voila, title passes to the beneficiary without the need for probate.
Boats (Current Limitation)
Unfortunately, the Texas Parks & Wildlife Department does not permit a beneficiary designation for a vessel or outboard motor at this time. It seems odd, considering cars, trucks, and mobile homes may have a beneficiary named. However, TP&W does provide a form for passing on a boat to an owner’s heirs if no probate is conducted or needed on the owner’s estate. The limitation is that the boat must go to the owner’s legally defined heirs, and the owner cannot just designate someone to receive it.
Key Rules and Reminders
Revocability and Priority Over Wills
All beneficiary designations, even those filed in the DMV or deed records, are revocable. If the owner changes their mind about who is to receive a piece of property, the designation can be rescinded or changed.
Important: A contrary Will provision does not revoke a beneficiary designation.
Ownership Before Death
The designated beneficiary does not have any ownership interest in the property until the owner dies. In other words, naming a beneficiary does not give that person any current rights in the property.
Put Beneficiary Designations to Work
There’s nothing to lose. Schedule a consultation to talk with Virginia Hammerle or Kendra Rey at Hammerle Morris Law Firm to see if you can harness the power of beneficiary designations and save your beneficiaries the time and money of probate.
