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California's Transfer on Death Deed

Posted by Nina Whitehurst | Sep 26, 2019 | 13 Comments

WHAT IS A TRANSFER ON DEATH DEED?

A nonprobate device to transfer residential real property to a named beneficiary upon the owner's death.  Like a will, no consideration is required and the beneficiary's acceptance is not required.  Capacity to contract is required.  TODs are revocable by recording a revocation, recording an absolute conveyance, or recording a subsequent TOD deed.

WHO IS A GOOD CANDIDATE FOR CREATING A TRANSFER ON DEATH DEED?

  • Owner is unmarried.
  • Property is owned free and clear and the owner has no other debt.
  • The owner plans to designate one individual as the death beneficiary.
  • The death beneficiary is a suitable candidate for an outright distribution of real property (not a minor, not a spendthrift, has not judgements against him or her or any pending litigation, not at risk of divorce, not drawing government benefits, etc.)
  • The remainder of the owner's estate is less than $166,250.

WHAT MUST THE DEATH BENEFICIARY DO TO OBTAIN TITLE WHEN TRANSFEROR DIES?

The death beneficiary must RECORD evidence of the transferor's death (Prob. Code § 210), and file a change in ownership notice (Rev. & Tax. Code § 480).  If the transferor received Medi-Cal benefits, the beneficiary must notify the State Department of Health Care Services of the transferor's death and provide a copy of the death certificate (Prob. Code § 215).

WHAT GOALS ARE TODs INTENDED TO ACHIEVE?

  • Transfer on death
  • Avoid probate
  • Cost effective (supposed to be Do It Yourself)
  • Revocable

HOW DO TODs COMPARE TO OTHER TRANSFER ON DEATH DEVICES RE THE ABOVE GOALS?

GOAL

TRANSFER ON DEATH

AVOID PROBATE

DIY

REVOCABLE

Will

Yes

No

No

Yes

Inter Vivos Trust

Yes

Yes

No

Yes

JTWRS

Yes

Yes

No

No

TOD Deed

Yes

Yes

Yes

Yes

HOW DO TODs COMPARE TO OTHER TRANSFER ON DEATH DEVICES ON OTHER CONSIDERATIONS?

GOAL

STEP UP IN BASIS

ANY PROPERTY

NO EXPOSURE TO BENEFICIARY'S CREDITORS

BENEFICIARY MAY NOT SELL OR ENCUMBER HIS/HER INTEREST

CAN MAKE GIFTS OF UNEQUAL SHARES

ANTI-LAPSE

Will

Yes

Yes

Yes

Yes

Yes

Yes

Inter Vivos Trust

Yes

Yes

Yes

Yes

Yes

Yes

JTWRS

Half

No

No

No

No

n/a

CPWRS

Yes

No

No

No

No

n/a

TOD Deed

Yes

No

Yes

Yes

No

No

OTHER DISADVANTAGES OF TRANSFER ON DEATH DEEDS

  1. A little too easy to trick vulnerable seniors due to nature and simplicity of device.
  2. Testamentary capacity insufficient.  Must have the (higher) capacity to contract.  This can be a problem if the grantor's capacity is diminished.
  3. Likely to create more litigation, some say.
  4. Limited to residential real property.  Can 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.
  5. Potential conflicts with other estate planning devices.
  6. A co-owner must complete and RECORD a separate TOD deed.
  7. Cannot be revoked by will.
  8. TOD does not override JTWRS or CPWRS or just plain community property (i.e., without survivorship).  Spouse's joinder must be by a separate writing.  Spouse may revoke consent.
  9. As a result of the new law, the rights of post-death purchasers are subject to divestment for 60-120 days after date of death.  A TOD deed may be recorded up to 60 days after date of death, and if a successful contest action is filed and a lis pendens recorded within 120 days of the transferor's death, the court must order the TOD deed void and transfer the property to the person entitled to it.  This effectively makes title uninsurable for 120 days after date of death.
  10. Law makes the death beneficiary personally liable to creditors of the decedent's estate, up to the equity in the property, plus net income (not defined, allowable offsets unclear) received from the property plus, if the beneficiary sells the property, interest on the sales price (presumably net of liens, but this is not clear) at 10% from the date of sale.  The personal representative may make a restitution demand up to three years after the decedent's death.
  11. The law does have an expiration date, but deeds recorded before then remain effective.  The law was originally set to expire on January 1, 2021, but at the last minute it was extended for another year, to January 1, 2022.

FAQ'S

WHAT DOES THE TOD DEED DO? When you die, the identified property will transfer to your named beneficiary without probate. The TOD deed has no effect until you die. You can revoke it at any time.

CAN I USE THIS DEED TO TRANSFER NONRESIDENTIAL PROPERTY? No. This deed can only be used to transfer residential property. Also, the deed cannot be used to transfer a unit in a stock cooperative or a parcel of agricultural land that is over 40 acres in size.

CAN I USE THIS DEED TO TRANSFER A MOBILEHOME? The deed can only be used to transfer a mobilehome if it is a “fixture” or improvement under Section 18551 of the Health and Safety Code. If you are unsure whether your mobilehome is a fixture, you may wish to consult an attorney. An error on this point could cause the transfer of your mobilehome to fail.

HOW DO I USE THE TOD DEED? Complete this form. Have it signed by two persons who are both present at the same time and who witness you either signing the form or acknowledging the form. Then NOTARIZE your signature (witness signatures do not need to be notarized). RECORD the form in the county where the property is located. The form MUST be recorded on or before 60 days after the date you notarize it or the deed has no effect.

IF I AM UNABLE TO SIGN THE DEED, MAY I ASK SOMEONE ELSE TO SIGN MY NAME FOR ME? Yes. However, if the person who signs for you would benefit from the transfer of your property, there is a chance that the transfer under this deed will fail. You may wish to consult an attorney before taking that step.

CAN A PERSON WHO SIGNS THE DEED AS A WITNESS ALSO BE A BENEFICIARY? Yes, but this can cause serious legal problems, including the possible invalidation of the deed. You should avoid using a beneficiary as a witness.

IS THE “LEGAL DESCRIPTION” OF THE PROPERTY NECESSARY? Yes.

HOW DO I FIND THE “LEGAL DESCRIPTION” OF THE PROPERTY? 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. If you are not absolutely sure, consult an attorney.

HOW DO I “RECORD” THE FORM? 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 witnessed and notarized, and RECORD a revocation form. (2) Create, have witnessed and 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 within 120 days after the TOD deed would otherwise operate, the TOD deed will have no effect. If the transfer document is not RECORDED within that time period, 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 do all of the following: (1) RECORD evidence of your death (Prob. Code § 210). (2) File a change in ownership notice (Rev. & Tax. Code § 480). (3) Provide notice to your heirs that includes a copy of this deed and your death certificate (Prob. Code § 5681). Determining who is an “heir” can be complicated. Your beneficiary should consider seeking professional advice to make that determination. (4) RECORD an affidavit affirming that notice was sent to your heirs (Prob. Code § 5682(c)). (5) 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 beneficiary may wish to consult a professional for assistance with these requirements.

WHAT IF I NAME MORE THAN ONE BENEFICIARY? 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.

HOW DO I NAME BENEFICIARIES? (1) If the beneficiary is a person, you MUST state the person's FULL name. You MAY NOT use general terms to describe beneficiaries, such as “my children.” You may also briefly state that person's relationship to you (for example, my spouse, my son, my daughter, my friend, etc.), but this is not required. (2) If the beneficiary is a trust, you MUST name the trust, name the trustee(s), and state the date shown on the trust's signature page. (3) If the beneficiary is a public or private entity, name the entity as precisely as you can.

WHAT IF A BENEFICIARY DIES BEFORE I DO? 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.

CAN I ADD OTHER CONDITIONS ON THE FORM? No. 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.

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.

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About the Author

Nina Whitehurst

Attorney at Law Nina has been practicing law for over 30 years in the areas of estate planning, real estate and business law She is currently licensed in Alaska, Arizona, California, Colorado, Oregon and Tennessee. Her Martindale-Hubbell attorney rating is the highest achievable: 5 stars in peer...

Comments

K. Phan Reply

Posted Aug 04, 2020 at 15:03:15

Hi, I found your article is one of the clearest and detailed one. I would like to clarify one thing under the FAQs, if the sole beneficiary die before the giver, should the TODD has no affect just like the case of a TODD with multiple beneficiaries? Thank you very much!

Nina Whitehurst Reply

Posted Aug 05, 2020 at 11:15:43

A beneficiary deed may designate a successor grantee beneficiary. If the beneficiary deed designates a successor grantee beneficiary, the deed shall state the condition on which the interest of the successor grantee beneficiary would vest. Unless the beneficiary deed provides otherwise, if there are no grantee beneficiaries named in the beneficiary deed who survive the owner, the beneficiary deed is void.

Nina Whitehurst Reply

Posted Nov 10, 2020 at 12:35:27

If a designated beneficiary predeceases the grantor, the property goes to the other surviving beneficiaries or, if none, then it reverts to the grantor and may then require a probate.

P West Reply

Posted Dec 29, 2020 at 14:34:35

Hi Nina, for TOD, why does the remainder of the owner’s estate need to be less than $150,000?
Thanks!

Nina Whitehurst Reply

Posted Dec 29, 2020 at 15:44:04

That is not a legal requirement but a suggestion as to when it make sense to use a TOD deed. If the rest of the estate is less than $166,250 (was $150,000 up until a few years ago), then probate can be avoided using a Small Estate Affidavit in addition to the TOD deed. If the rest of the estate will be more than $166,250, then more sophisticated forms of estate planning are recommended.

Heleena Castro Reply

Posted Jan 06, 2021 at 12:59:20

My mother just passed away. She had a TOD deed on her home and listed me and my sister as the beneficiaries. My sister also passed away this year (before mother). According to everything I read, if a beneficiary dies and more than one is listed, the shares are divided equally between the surviving beneficiaries (me only). I’m not sure how to record this with the county. I assume I need to file an affidavit of death for my mother and sister along with the Change of Ownership form but how do I get my sister’s name off the deed?

Nina Whitehurst Reply

Posted Jan 06, 2021 at 13:02:48

Heleena, I cannot provide individualized advice on my website. Please call my office or email me to schedule a personal consultation.

P. Bigelow Reply

Posted Jan 07, 2021 at 16:35:17

You indicate after death the home may be liable for Medi-Cal reimbursement. However, the new California law passed in 2017 limits recovery to the Medi-Cal recipient’s probate estate. Since a TOD deed avoids probate, I don’t see how the home is liable for Medi-Cal reimbursement. Could you clarify?

Nina Whitehurst Reply

Posted Jan 08, 2021 at 11:03:34

The statute itself includes FAQ’s and one of the FAQs is this: “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.”

Rene Sanchez Reply

Posted Mar 05, 2021 at 05:23:55

Hi Nina, you stated on this blog that an executed TOD in California can be recorded after the Transferor’s death as long as it is within 60 days of being executed. Is this still true in 2021? I can’t find a consistent answer.

Nina Whitehurst Reply

Posted Mar 25, 2021 at 07:46:00

Rene, I cannot give personalized legal advice over the internet. Please call our office to schedule a personal consultation.

Michelle Williams Reply

Posted Apr 19, 2022 at 09:35:39

My brother is selling my mother house.He is on title and my sister on the deed. Can he take her off without her signature.Out six he the only one wants to sell.

Nina Whitehurst Reply

Posted Apr 28, 2022 at 03:36:34

No real property owner or co-owner can be “removed” from the title without that owner’s signature.

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