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Horizon Elder Law & Estate Planning Blog

Monday, October 17, 2016

Tip Sheet on How to Avoid Probate in California with Revocable Transfer on Death Deed by Deed and Record

How can you avoid probate on your home?

Probate is an expensive, long and drawn-out process. It eats away the time and energy of our loved ones after we die. It eats away at our assets as well, with money being funneled into court fees, attorneys’ fees and trustee fees. Many people avoid probate by setting up one or more trusts and transferring their assets into the trust.

Trusts vs. Quitclaim Deed vs. Transfer on Death Deed

Sometimes though, a trust isn’t always the best option to convey real property, especially for people with few assets. Thanks to a recent law signed by Governor Brown in 2016, there is another option for people who just want to transfer their home – the Revocable Transfer on Death Deed. 

Previously, people would use a quitclaim deed to transfer their residence without probate proceedings, but quitclaim deeds have their disadvantages, including:

  • Increase in property tax
  • potential large capital gains tax
  • Lender approval
  • Loss of control by current owner
  • Potential exposure to the transferee’s creditors and ex-spouse

Requirements for Transfer on Death Deed

A transfer on death deed allows a homeowner to transfer their home to one or more beneficiaries once the homeowner dies, thereby avoiding probate. In order to qualify for a transfer on death deed, the property must be:

  • A single family dwelling on less than 40 acres or
  • A multi-family dwelling of not more than 4 residential units

Additionally, the deed must:

  • Be signed and dated in front of a notary, and
  • Be recorded within 60 days from the date signed

The homeowner can revoke the transfer on death deed at any time by either recording a formal notice of revocation or by recording a new transfer on death deed. This type of deed has pitfalls, such as an inability of the beneficiary to obtain title insurance and creditors claims that may pass to the beneficiary.

Transfer on Death Deeds and Joint Tenancy

If the residence is held in joint tenancy or is community property with right of survivorship, all of the property will pass to the co-owner upon your death. With this in mind, the transfer on death deed will mean nothing unless you outlive the spouse/co-owner. In this situation, a trust might be more appropriate.

One final note…

Transfer on death deeds will not work if you are seeking to transfer your property to a minor, as this would violate California law. If you have minor children, a trust, custodian or guardian may be appropriate.

Avoiding probate can be done, and your odds of achieving this are increase dramatically with the help of an experienced estate-planning attorney. Attorney Julie Fiedler will listen to you and let you know what your best course of action is for avoiding probate.  Call today at 925-224-1185 to schedule a consultation.

 


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