Transfer on Death Deeds
AB 139 went into effect on January 1, 2016, and allows Californians to record a Transfer on Death Deed, which will keep their property out of probate should they pass away without a Living Trust. A good estate plan for many would include a Living Trust, Power of Attorney, Advance Healthcare Directive with HIPAA authorization and Final Disposition Instructions. However, if you cannot afford an attorney or legal document assistant to draft these documents for you, then a Transfer on Death Deed may be an effective way of managing your property.
What properties can be transferred via TODD?
Single family residence or condominium, single family residence with agricultural land of up to 40 acres, or a residential property with no more than 4 residential units.
How do I prepare a TODD?
Most Counties have a Transfer of Death Deed you can download. You will have to complete all of the information on the form which will include APN (Assessor's Parcel Number), Property Address and Legal Description. These can all be found on your current deed.
Fill out who the beneficiaries are (who you want the property to pass to when you pass away). If there is more than one beneficiary, you will have to name how they will hold title when you pass away and what percentage ownership you would like each of them to have.
Sign and date the TODD in front of a notary public. You will have to show proper identification to the notary and you must be of sound mind, under no duress and ability to understand what the ramifications of signing this document are. Once the document is notarized, take it to the County Recorder's Office for recording.
How do I revoke a TODD?
Revoking a Transfer on Death Deed is fairly simple, either one of the below options will work:
1. Complete, sign with notary, and record a Revocation of Transfer on Death Deed.
2. Complete, sign with notary a new Transfer on Death Deed. Any new TODD will revoke the prior TODD.
3. Sell or transfer the property to someone else prior to your death.
Benefits of a TODD:
1. A Transfer on Death Deed will allow you to transfer property to named beneficiaries upon your death. It will keep your property out of probate, which is easier on your loved ones, and saves money and time.
2. Transfer on Death Deeds are inexpensive and quick to prepare and record.
3. Transfer on Death Deeds are revocable during your lifetime; if you change your mind, file a Revocation, a new TODD or sell the property. You keep 100% control of your property as long as you are alive.
4. It avoids potential gift taxes. Some people decide to add loved ones as Joint Tenants with Rights of Survivorship, however, you may have to include this on your taxes as a gift, as well as the recipient of the gift.
Risks of TODD:
1. It you name a beneficiary and they predecease you, the property will still have to go through probate.
2. If you own the property as Joint Tenants with another co-owner and you die first, the property will go to the joint tenant.
3. If the beneficiary is a minor at the time of your death, a custodian that is appointed by the court must be assigned until the minor reaches legal age.
4. The property may be subject to Medi-Cal estate recovery if the owner was a Medi-Cal recipient. It would be wise to look into the guidelines before transferring your property via TODD.
5. The debt that remains on the property will be transferred to the beneficiary upon the owner's death, as well as any liens that are on the property.
It is always a good idea to prepare an estate plan to distribute your property upon your passing. It is truly the best way to let your loved ones understand what your wishes are if and when that time comes. However, a Transfer on Death Deed is a quick, easy and cheap way to pass one of your most valuable assets on to your beneficiaries if nothing else is in place.
If you need help on establishing a TODD deed or a Living Trust, please feel free to contact me anytime at (925) 336-5711.