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Horizon Elder Law & Estate Planning Blog

Tuesday, January 5, 2016

Transfer of Property at Death

In September, 2015, AB 139 was signed by the Governor of California creating a Revocable Transfer on Death Deed (“TOD Deed”).  This deed transfers real property to a beneficiary without the necessity of a probate proceeding.  The new law is currently only in place for five years, during which time lawmakers will study its use, and eventually extend the law or modify it.  This type of transfer deed can be an alternative to a living trust, but it is not for everyone. Understand when this would be an appropriate estate planning vehicle for you and when you should rely on the living trust to transfer property at your death.

Several points worth reviewing include the following:

PROS:

  • Transfer on Death Deed is simple to use;
  • It is less expensive than creating a living trust;
  • During the real property owner’s life, it remains revocable, so the owner can change his or her mind;
  • It will greatly simplify the procedure for transferring the property at death; and
  • It could minimize family conflict after death, since family members won’t be going through a formal probate proceeding that can last months to years.

CONS:

  • If the property owner has creditor, the Transfer on Death Deed does not protect the beneficiary from those creditors;
  • If a property owner received Medi-Cal benefits during his or her lifetime, the home will not be protected from a state recovery action when passed pursuant to a Transfer on Death Deed;
  • It can only be utilized with residential property of up to four units;
  • The deed cannot designate a class of beneficiaries, such as to my children;
  • It also cannot designate contingent beneficiaries if a beneficiary has died prior to the property owner;
  • It cannot be used for property co-owned as joint tenants or community property with right of survivorship; and
  • This simple deed can be easily utilized in the commission of elder abuse on vulnerable seniors by easily having them sign the deed over to the abuser upon the senior’s death.

For people with disabled beneficiaries, owners of property who have received Medi-Cal benefits, those with multiple properties, or blended families, this Transfer on Death Deed may not provide the intended results.  It is recommended that you consult an experienced estate planning or elder law attorney to discuss whether this is a viable option in your situation.


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