SIMPLE REVOCABLE TRANSFER ON DEATH (TOD) DEED
(California Probate Code Section 5642) New California Law was enacted on September 21 of 2015
Assembly Bill 139 (Gatto) passed the Legislature on September 9. AB 139 establishes a method for conveying real property upon death through a revocable transfer upon death deed.
This document is exempt from documentary transfer tax under Revenue & Taxation Code 11930.
This document is exempt from preliminary change of ownership report under Revenue & Taxation Code 480.3.
Is cheaper than setting up a Living Trust which may cost $1500 to $2000 plus recording and preparing. The Transfer on Death Deed is simple and can be prepared by the homeowner. Only costs are notary and recording. Notary costs vary from $20- 100 and recording in most counties is $110
Here are all the ins and outs of this type of vesting that avoids probate used in other states:
THE DEED MUST BE RECORDED ON OR BEFORE 60 DAYS AFTER THE DATE IT IS SIGNED AND
NOTARIZED.
Use this deed to transfer the residential property to your named beneficiaries when you die.
Consult an attorney
before using this deed. It may have results that you do not want. Provide only the information asked for in the form. DO NOT INSERT
ANY OTHER INFORMATION OR INSTRUCTIONS or it becomes invalid.
BENEFICIARY(IES) FULL NAME(S) of the person(s) who will receive the property on your death and state the RELATIONSHIP that each named person has to you (spouse, son, daughter, friend, etc.):
This deed only transfers ownership share of the property. The deed does NOT transfer the share of any co-owner of the
property. Any co-owner who wants to name a TOD beneficiary must execute and RECORD a SEPARATE deed.
When you die, the identified property will transfer to your named beneficiary without probate. The
TOD deed has no effect until you die. It can be revoked it at any time.
This deed is only be used to transfer (1) a parcel of property that
contains one to four residential dwelling units, (2) a condominium unit, or (3) a parcel of agricultural land of 40 acres or less, which
contains a single-family residence.
This information may be on the deed you received when you
became an owner of the property. This information may also be available in the office of the county recorder for the county where the
property is located.
Take the completed and notarized form to the county recorder for the county in which the
property is located. Follow the instructions given by the county recorder to make the form part of the official property records.
WHAT IF I SHARE OWNERSHIP OF THE PROPERTY? This form only transfers YOUR share of the property. If a co-owner also
wants to name a TOD beneficiary, that co-owner must complete and RECORD a separate form.
CAN I REVOKE THE TOD DEED IF I CHANGE MY MIND? Yes. You may revoke the TOD deed at any time. No one, including your
beneficiary, can prevent you from revoking the deed.
HOW DO I REVOKE THE TOD DEED? There are three ways to revoke a recorded TOD deed: (1) Complete, have notarized, and
RECORD a revocation form. (2) Create, have notarized, and RECORD a new TOD deed. (3) Sell or give away the property, or transfer
it to a trust, before your death and RECORD the deed. A TOD deed can only affect property that you own when you die. A TOD deed
cannot be revoked by will.
CAN I REVOKE A TOD DEED BY CREATING A NEW DOCUMENT THAT DISPOSES OF THE PROPERTY (FOR EXAMPLE, BY
CREATING A NEW TOD DEED OR BY ASSIGNING THE PROPERTY TO A TRUST)? Yes, but only if the new document is
RECORDED. To avoid any doubt, you may wish to RECORD a TOD deed revocation form before creating the new instrument. A TOD
deed cannot be revoked by will, or by purporting to leave the subject property to anyone via will.
IF I SELL OR GIVE AWAY THE PROPERTY DESCRIBED IN A TOD DEED, WHAT HAPPENS WHEN I DIE? If the deed or other
document used to transfer your property is RECORDED before your death, the TOD deed will have no effect. If the transfer document
is not RECORDED before your death, the TOD deed will take effect.
I AM BEING PRESSURED TO COMPLETE THIS FORM. WHAT SHOULD I DO? Do NOT complete this form unless you freely
choose to do so. If you are being pressured to dispose of your property in a way that you do not want, you may want to alert a family
member, friend, the district attorney, or a senior service agency.
DO I NEED TO TELL MY BENEFICIARY ABOUT THE TOD DEED? No. But secrecy can cause later complications and might make it
easier for others to commit fraud.
WHAT DOES MY BENEFICIARY NEED TO DO WHEN I DIE? Your beneficiary must RECORD evidence of your death (Prob. Code §
210), and file a change in ownership notice (Rev. & Tax. Code § 480). If you received Medi-Cal benefits, your beneficiary must notify
the State Department of Health Care Services of your death and provide a copy of your death certificate (Prob. Code § 215). Your beneficiaries will become co-owners in equal shares as tenants in
common. If you want a different result, you should not use this form.
You MUST name your beneficiaries individually, using each beneficiary’s FULL name. You MAY
NOT use general terms to describe beneficiaries, such as “my children.” For each beneficiary that you name, you should briefly state
that person’s relationship to you (for example, my spouse, my son, my daughter, my friend, etc.).
If all beneficiaries die before you, the TOD deed has no effect. If a beneficiary dies
before you, but other beneficiaries survive you, the share of the deceased beneficiary will be divided equally between the surviving
beneficiaries. If that is not the result you want, you should not use the TOD deed.
WHAT IS THE EFFECT OF A TOD DEED ON PROPERTY THAT I OWN AS JOINT TENANCY OR COMMUNITY PROPERTY WITH
RIGHT OF SURVIVORSHIP? If you are the first joint tenant or spouse to die, the deed is VOID and has no effect. The property
transfers to your joint tenant or surviving spouse and not according to this deed. If you are the last joint tenant or spouse to die, the
deed takes effect and controls the ownership of your property when you die. If you do not want these results, do not use this form. The
deed does NOT transfer the share of a co-owner of the property. Any co-owner who wants to name a TOD beneficiary must complete
and RECORD a SEPARATE deed.
DO NOT ADD ANY OTHER CONDITIONS ON THE FORM If you do, your beneficiary may need to go to court to clear title.
IS PROPERTY TRANSFERRED BY THE TOD DEED SUBJECT TO MY DEBTS? Yes. Mortgage, Home Equity Line of Credit or Reverse Mortgages still need to be paid.
DOES THE TOD DEED HELP ME TO AVOID GIFT AND ESTATE TAXES? No.
HOW DOES THE TOD DEED AFFECT PROPERTY TAXES? The TOD deed has no effect on your property taxes until your death. At
that time, property tax law applies as it would to any other change of ownership.
DOES THE TOD DEED AFFECT MY ELIGIBILITY FOR MEDI-CAL? No.
AFTER MY DEATH, WILL MY HOME BE LIABLE FOR REIMBURSEMENT OF THE STATE FOR MEDI-CAL EXPENDITURES?
Your home may be liable for reimbursement. If you have questions, you should consult an attorney.
A transfer-on-death (TOD) deed, or beneficiary deed, allows an owner of real property to execute a deed that names a beneficiary who will obtain title to the property at the owner’s death without going through probate.
TOD deed has no tax consequences.
TOD deed solves many of the drawbacks associated with the other mechanisms available for transferring real property at death. In contrast with using joint tenancy or a legal remainder interest, a TOD deed creates no present interest in the named beneficiary. This provides several benefits: The owner does not make a completed gift for gift tax purposes; if the owner changes his mind about the beneficiary, the owner can change the designation at any time before death; and because the beneficiary has no interest in the property until the owner dies, the beneficiary’s creditors cannot reach the property.
Costs of probate are large.
The TOD option protects owners from unscrupulous relatives while they are alive. Often at end of life property owners change the intention of their will by pressure, confusion or elder abuse.
A disadvantage of TOD deeds is that people may use them without consulting a lawyer and may make legal mistakes. For example, an owner might name one beneficiary but neglect to provide for the possibility that the beneficiary predeceases the owner. Despite the risk of mistakes on the part of users, these mistakes may be less troubling than the mistakes that occur in connection with the use of joint tenancy as a will substitute. The loss of one’s house during life to the beneficiary or the beneficiary’s creditor is at least as problematic as the risk that the death of a beneficiary prior to the owner will disrupt the owner’s estate plan.
Another concern involves challenges that may occur after the owner’s death. If someone challenges the effectiveness of a deed, perhaps based on an argument that the owner lacked capacity when the owner executed the deed, a court proceeding may be needed to resolve the issue. However, the need for court involvement, or at least the involvement of lawyers, is present in any challenge to a transfer at death, thus the concern is not unique to TOD deeds.
Most title companies put a holding period on a TOD- often six months to a year for beneficiaries to sell the property. They wait to see if other family relatives will sue the estate. A title company also may be reluctant to issue title insurance if a contradiction or ambiguity exists with respect to the transfer of the property. TOD deed, if validly recorded and not revoked by a subsequent deed, controls, and the owner’s will has no effect on the deed. The same result is true with respect to deeds held in joint tenancy, so presumably once the newness of TOD deeds wears off, title companies will not be concerned with this issue.
TOD deed is not be the best choice if the beneficiary needs to sell the property soon after the owner’s death.
During the owner’s lifetime, the owner retains full power and control over the property. The property owner who wants to use a TOD deed to transfer property at his death must execute and record the deed before death. All statutes provide that the deed must be recorded to have effect. The owner of property can revoke a TOD deed at any time by executing a subsequent TOD deed or an instrument of revocation. The subsequent deed or instrument of revocation must be recorded for the revocation to be effective.
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The execution of a TOD deed has no tax consequences. The designation of a beneficiary is not a com-pleted gift because the designation remains revocable. Thus, the designation is not a taxable event for gift tax purposes.
The beneficiary has no interest in the property until the owner’s death, and the beneficiary cannot affect or challenge the owner’s use of the property or the owner’s decision to encumber or sell the property. Delivery of the deed by the owner and acceptance of the deed by the beneficiary are not required, and the owner need not notify the beneficiary when the owner creates or revokes the deed. TOD deed statutes permit the owner to name multiple beneficiaries.
This vesting is new to California.
This is not offered as legal advice.
Contact your local County in California for the form.
You will need current Identification and to be fingerprinted by the notary.
