How to Transfer Property to a Family Member in Texas: Gifts, Sales, and Estate Planning Options

Transferring property to a family member is one of the most meaningful, and legally consequential, things you can do as a property owner. Whether you want to give your home to your children, pass a piece of land to a sibling, or set up a transfer as part of your estate plan, Texas law provides several mechanisms to accomplish that goal. But how you structure the transfer matters enormously. The wrong approach can trigger unexpected tax consequences, create title problems, or fail to accomplish your estate planning goals.

Common Ways to Transfer Property to a Family Member in Texas

There are several recognized methods for transferring real property to a family member in Texas. The right option depends on your goals, the nature of the property, whether you are married, and your broader estate planning situation:

• Gift Deed - A gift deed transfers property from one person to another without the payment of money. For a gift deed to be valid in Texas, there must be donative intent (the genuine desire to make a gift), delivery of the deed to the recipient, and acceptance by the recipient. Gift deeds typically recite "love and affection" as the consideration rather than a dollar amount. When property is transferred from parent to child, Texas courts presume the transfer is a gift. If both spouses are listed as grantees in a gift deed, each receives an undivided one-half interest as their separate property. Note that federal gift tax rules may apply if the value of the property exceeds the annual gift tax exclusion (which was $18,000 per recipient as of 2024), and gifts do not receive a step-up in basis at death, which can have capital gains tax consequences.
• Sale at Fair Market Value or Below - Property can also be transferred to a family member through a sale, either at full fair market value or at a discounted price. A sale at fair market value generally does not trigger gift tax, and the buyer receives a stepped-up cost basis equal to the purchase price. A sale at below fair market value may be treated as a part-gift, part-sale transaction with gift tax implications for the difference. In either case, the transfer is accomplished through a deed - typically a warranty deed - that is properly executed, acknowledged, and recorded.
• Lady Bird Deed (Enhanced Life Estate Deed) - A Lady Bird deed is a popular estate planning tool in Texas that allows a property owner to retain full control of the property during their lifetime - including the right to sell, mortgage, or revoke the transfer - while naming a beneficiary who will receive the property automatically upon the owner's death. This type of deed avoids probate, preserves the owner's Medicaid eligibility in many situations, and allows the beneficiary to receive a stepped-up tax basis at death. Texas Property Code Section 5.041 supports the creation of future interests by deed, and Lady Bird deeds are widely accepted by title companies in Texas.
• Transfer on Death Deed (TODD) - Texas Estates Code Chapter 114 authorizes a Transfer on Death Deed, which is a revocable deed that transfers property to a named beneficiary upon the owner's death, without going through probate. A TODD must be executed and acknowledged during the owner's lifetime and recorded before the owner's death. It can be revoked at any time during the owner's lifetime. A TODD cannot be created through a power of attorney. While TODDs are a useful tool, some title companies have historically been cautious about insuring title based solely on a TODD, so it is worth discussing the implications with an attorney before relying on this method exclusively.

Community Property Considerations

If you are married and the property you want to transfer is community property, both spouses must participate in the transfer. Each spouse has the right to manage their own separate property independently, but community property requires both spouses' agreement. If one spouse has died, the surviving spouse cannot simply transfer community property assets without following the proper probate process, as the deceased spouse's interest in community property remains subject to their debts and estate. Attempting to transfer community property outside of the probate process can expose the surviving spouse to personal liability.

What Does the Deed Need to Include?

Regardless of which transfer method you choose, the deed must satisfy Texas Property Code requirements to be effective: it must be in writing, properly describe the property, identify the grantor and grantee, contain words of conveyance (such as "grant" or "convey"), be signed and acknowledged before a notary public, and be delivered to and accepted by the recipient. Title to the property vests in the new owner upon execution and delivery of the deed - but recording the deed with the county clerk provides public notice and protects against future competing claims.

Need Help Structuring a Property Transfer to a Family Member?

Family property transfers involve more than just signing a form. The method of transfer, the type of deed, and the language used can all affect your tax situation, your estate plan, and your family's rights for years to come. If you would like a deed or transfer instrument prepared for your specific situation, you are welcome to submit a request. A Texas attorney will review the details and discuss which option may be appropriate for your goals.