Benefits of a Transfer on Death Deed in California Estate Planning

May 24, 2019

Many Californians are well-aware of the hassles of going through the probate process, which is why they are usually willing to consider estate planning alternatives that allow them to avoid it. One option you may want to learn more about is the transfer on death (TOD) deed, which is available to qualifying property owners. You should rely on a knowledgeable California estate planning attorney to provide advice tailored to your specific circumstances, but a summary of TOD deeds should be useful.

The TOD deed is covered under California’s Revocable Transfer on Death Deed statute, which became effective in January 2016 and is temporary in nature. Through January 1, 2021, you can transfer residential real estate to a named beneficiary via a TOD deed without the asset going through the probate process. By executing a TOD deed in accordance with the legal requirements, you enjoy all ownership rights and retain title until your death. Upon that date, ownership transfers to your designated beneficiary by operation of law. Plus, you can revoke it at any time if you so choose.

The TOD deed must comply with the statute, which requires you to include:

• The name of your beneficiary;
• The legal description of the real estate; and,
• Your own signature and the date of execution.

The TOD deed must be properly notarized, and you must record it in the county where the property lies within 60 days after execution. In addition, there are certain legal requirements that apply to the real estate itself. You cannot pass property via a TOD deed if:

• There is a co-owner or joint tenant;
• The real estate is held as community property by right of survivorship; or,
• The subject property is a multi-family residence with more than four units.

The primary advantage of executing a TOD deed is that you avoid probate with respect to the subject property. Even if you do have a will, probate can be expensive and take several months – or even years – to complete the process. Your intended beneficiary could be forced to pay attorneys’ fees for representation in the proceedings, during which time he or she does not officially own the real estate.

It is also possible to transfer real estate and avoid probate by creating a trust as part of your estate plan. Before January 2016, this was the only option; a trust is also much more complicated to execute and carry out. During the five-year period that Californians can take advantage of the law, it is wise to consult with a lawyer about including a TOD deed in your estate plan.

If you would like more information on the function of TOD deeds and the role they play in estate planning, please contact the Sacramento Law Office of Kristina M. Reed. You can reach the firm to set up a consultation by calling 916-492-6033 or visiting us online. We can provide useful, personalized advice after reviewing your circumstances and estate planning objectives.