There are several ways an owner of real property can direct the transfer of real property when they die. Up until recently, the most common way was through a trust, will or owning the property in joint tenancy with another person or persons. Effective January 1, 2016, there is now a new way California allows real property to be transferred upon a person’s death and avoid probate.
Governor Jerry Brown signed Assembly Bill 139 which established a procedure to transfer real property upon death through a revocable transfer on death deed. This revocable transfer on death deed is a new simple and inexpensive way to transfer real property to a beneficiary in California. The deed allows a person to leave their real property to a designated person or persons such as a family member, friend, life-long partner or other loved one, without having to set up a living trust.
Criteria For Transfer on Death Deed (TOD Deed)
The new TOD (transfer on death) deed allows an owner of residential real property to name one or more beneficiaries to receive the property when the owner dies, thus bypassing the need to probate the estate. There are some specific criteria, however, that a person should be aware of when considering recording a revocable transfer on death deed.
- The real property must be a single family home or condominium unit, or a multiple residence of not more than 4 residential dwelling units, or be a single family residence on no more than 40 acres of agricultural land.
- A revocable TOD deed must be signed and dated before a notary public to be effective and valid.
- The transfer on death deed must be recorded within 60 days or less from the date it is signed.
- The transfer on death deed can be revoked by the transferor at any time.
A Transfer On Death Deed may be a great option for a person whose only asset is the home in which he or she lives.
Revoking a Transfer on Death Deed
There are three ways the transferor/owner can revoke a transfer on death deed.
- The owner can record a formal notice of revocation.
- A new transfer on death deed may be recorded.
- The real property can be transferred to someone else prior to the transferor’s death.
Although the transfer on death deed must be recorded within 60 days or less from the date it is it signed and before the owner’s death, it is important to understand that the interest in the real estate only transfers when the owner dies. This means that the beneficiary identified on the TOD deed does not have any rights to the real property when the owner is alive. Furthermore, creditors of a named beneficiary cannot place any liens on the property. While the owner is living, the owner has the right to sell or encumber the property. The property is also subject to involuntary liens that may be recorded by creditors of the owner which would transfer with the property to the beneficiary upon the owner’s death.
In theory, a person that owns real property in California could execute and record more than one revocable transfer on death deed. The new law provides that the deed with the most recent recording date will be the one in effect.
Transfer on Death Deeds and Joint Tenancy
If you co-own the property as joint tenancy or community property with right of survivorship, the other owner automatically receives your share of the property upon your death. The TOD deed has no effect unless you outlive the other joint tenant. In this regard, co-owners may consider signing separate TOD deeds if they both want the same beneficiaries after both die. A better solution, however, would be to set up a living trust.
Downsides to a Transfer on Death Deed
If the person named in the deed as the transfer on death beneficiary dies before the real property owner does, the deed simply has no effect. This could result in the property having to be probated.
If the owner becomes incapacitated through stoke, dementia, or other event, there may be no one to revoke the deed which may be necessary due to a change in family circumstances or the need to qualify the person for Medicaid assistance.
If the Transfer on Death deed is not timely recorded within the statutory deadline (60 days or less from the date it is signed) the TOD deed becomes invalid. We recently had this situation happen to an individual who was attempting to record TOD deeds rather that set up a living trust. The TOD deeds were prepared and, as they requested, we sent to them client so they could record them. Unbeknownst to anyone, the client failed to timely record the deeds and then within a very short period of time died. By the time it was realized by the beneficiary that they had not been recorded, the TOD deeds had became invalid. The estate is now having to be probated. For these reasons, Transfer on Death Deeds should only be used as a last resort if there is not sufficient time to prepare proper estate documents.
Trust vs. New Transfer on Death Deed
For people with very few assets, recording a Transfer on Death Deed may be a quick and easy fix to set up beneficiaries to real property and avoid probate as compared to setting up a revocable living trust. However, since this transfer on death deed only directs the transfer of real property, it is not a great solution for people or couples that have minor children or have other assets that would be better administered through a trust. Additionally, since the transfer is to specific beneficiaries, problems could arise if the named beneficiaries are no longer living. Lastly, a person or couple with minor children should not name their minor children on a TOD deed. Under California law, although a minor may own real property or an interest therein, they may not convey or make contracts relating to real property. Refer to California Family Code Section 6701 which provides that minors cannot enter into contracts relating to real property, or personal property not in their immediate possession and control, and they cannot give a delegation of power. California Civil Code § 1556 also provides that minors are incapable of contracting. Therefore, since a minor cannot sell or purchase property held directly in his or her own name, transactions involving a minor’s interests in real property are best set up through a trust, custodian or guardian, for the benefit of a minor. The California Uniform Transfers to Minors Act (CUTMA) makes provision for the transfer of property to an adult “custodian” for the benefit of a minor. The custodian would then hold, control, manage, and invest the custodial property on behalf of the minor. When the custodianship terminates, title to the custodial property can then be transferred to the minor or the minor’s estate.
If you are considering using a Transfer on Death Deed as part of your estate plan, contact A People’s Choice. We offer professional, low-cost options for all your estate planning needs.
Do Mobile Homes qualify and where do i get the form? Thank you
Unfortunately this document only pertains to real property. A mobile home is not real property. The Department of Housing and Community Development has documents that pertain to mobile homes to designate a beneficiary should the owner die. You can either check with them or if you would like assistance in preparing the required forms, contact our office.
Would putting a single famil u home in a trust hamper the owners access to Medicare if they needed it? I’m assuming medicare can put a licensed on the property so they are paid back from trust when a home is SD after owners passing?
Although we are not attorneys and cannot advise you, what I can say is that the purpose of a trust is to avoid probate and really has nothing to do with getting or not getting Medicare. Obviously if you are in need of legal advice you should contract an attorney. Please call the office st 800-747-2780 if you would like us to assist you with your estate documents.
What’s the approximate cost to do this? Is it possible to name contingent beneficiaries too?
I am a Realtor and come across this situation all the time and would like to be know what you offer so I can let clients know. I am all for eliminating probate on as much as possible
Thanks
Current pricing for a Transfer on Death Deed is $100 plus a small recording fee. This type of deed is quite limited and cannot be utilized with all properties. It does not allow the naming of contingent beneficiaries and, although serves a purpose in an emergency situation, would not necessarily be considered the “ideal” estate planning vehicle as compared to a living trust which offers real property owners much more flexibility and can also avoid probate. As our article discusses, there are several drawbacks to relying on a TOD deed to avoid probate because of the unique requirements of the document itself and how the California statute was written.
Thank you, your article was very helpful and informative.
If the TOD Deed is not recorded within sixty days, what happens? Can it be recorded validly later?
The statute specifically states that a revocable TOD deed must be signed and dated before a notary public to be effective and valid AND must be recorded within 60 days or less from the date it is signed. We are not attorneys but my understanding is that if either does not happen, the recorded document would have no legal effect.
If a house is in the name of a husband and wife, and the husband has passed, can the wife create a TOD deed without first transferring the property into her name solely? Also, if there is more than one beneficiary on the TOD and one of them passes, is the TOD still effective for the remaining beneficiaries or does a new TOD need to be created?
Your article was really helpful and informative.
When a joint tenant passes, additional document would have to be recorded prior to a TOD deed. Our office could assist you with preparing both necessary documentation as well as properly recording the documents in the right sequence. It is my understanding that a TOD deed will be void if your beneficiary(ies) pre-decease you. If some of the beneficiaries are alive, however, they will split ownership equally. This is simply my understanding of the statute and you may want to consult with an attorney.
Can I designate a charitable organization as a beneficiary? Thank you!
In the Code, it says: 5608. “Beneficiary” means a person named in a revocable transfer on death deed as transferee of the property.”
I would check with an attorney. As you know, there has been some rulings by the Supreme Court such as the Citizens United decision that indicated corporations are considered people, but you would need to get legal advice as to where that applies in this context.
I am trying to find some sort of legal instrument that would allow my wife to remain in our home upon my death. I took out the reverse mortgage with Wells Fargo about 8 years ago which was prior to us being married in 2014. As a result, she is not on the loan or on the deed. She is also considerably younger than I am. Would creating a quit claim deed to put her name on the property as a joint owner be better than a TOD Deed? If I were to use the TOD would she have to pay newly assessed property tax upon my death? Would she avoid that if she was on the deed as a joint owner?
Unfortunately the questions you posed are legal questions that would need to be addressed by an attorney. Our office cannot advice which type of deed would be better to accomplish what you want. However, once you get the answer to your questions from an attorney, rather than have the attorney prepare the documents, our office can prepare the paperwork for a much lower cost. We can also prepare estate planning documentation should that be the avenue you decide to do. Please contact us once you have received some direction from an attorney on this issue.
I have 2 properties that I would like to do a beneficiary deed. One property is normal… and
1 property is a manufactured home and the associations owns the land. I pay taxes on the home and the associations pays taxes on the club house and all the lots were the homes are on.
What about the manufactured home and what am I looking at cost wise
The document required for each property would be $100. (total of $200 for both). There is a different process for the manufactured home since it you do not own the land, but we can assist with both.
I’ve read that POD on bank accounts override anything written in a will. If that’s true, does a Transfer on Death Deed override an already written Revocable Trust? I have Trust and my house goes to both of my children. To make it easier for them, would it be a good idea to also do a Transfer on Death Deed? And what would happen if one of my children dies before I had the chance to change the Transfer on Death Deed? Thank you!
First a Transfer on Death deed pertains only to real property. Secondly, a will is completely different than a trust. If your property is in the name of a living trust, it is not in your personal name (although you are the trustee) but rather in the name of the trust.Therefore property titled in the name of a living trust would most likely be controlled by the terms of the trust upon the death of the trustee. That is the point of having a living trust. The property in the name of the trust is controlled by the terms of the trust. In my opinion, having a solid estate plan with a living trust is certainly a better way to go than a TOD and since you have one, it would seem that the better option would be to make sure your trust provisions are up-to-date with how you want your estate distributed after you die. It is always a good idea to periodically review your living trust provisions. If you feel you need to change your trust provisions, you might consider doing a restatement of your trust if you need to update its provision if changes need to be made. That is like a super amendment and allows you to change everything and anything in your trust but allows you to keep the same trust name. Therefore, anything that is already titled in your trust name does not have to be changed. Usually your trust will have included provisions to accommodate a situation when a child predeceases you. If it does not and you decide to have our office assist you with a trust restatement, these provisions can be easily accommodated.
My mother has a Living Trust/Will. She recently also had a Living Estate document to allow my brother to remain in the home. Her intention was to pass the title of the property to my brother only to be sold if he so desires. There are three other of us siblings and we agree with this. Can the Transfer of Death transfer the title to him without changing any of the documents already in place or does she have to re-do her trust/will?
Transfer on Death deeds are typically used as a last-resort option when time is not available to prepare proper estate planning documents. Rather than making things more complicated, if your mother already has a living trust, it would seem appropriate that she merely update her existing estate planning documents to incorporate what she wants done with the house. We can easily assist in the preparation of an amendment that would incorporate her wishes.
Sandy, my problem with a trust is that the amendments cost. Each time one would want to change something on their trust, they’d have to consult the lawyer and deal with costs. Where can I find information about the cost of a simple trust (basically the house), and what amendments cost? Also, how long have you been in this business? Thank you!
Hi Lee: we’ve been in business for over 36 years. Yes it is true if you make regular amendments to your trust there will be a cost. Simple amendments are not very expensive and may even be able to be done by yourself. However, normally people don’t need to make amendments because you can identify changing personal property gifts on a separate document. Our individual trusts presently run $499 and $100 for the deed. Our fees are highly competitive and I think you probably will be hard-pressed to find something less expensive. Let us know if you need help on this.
I live in Laguna Woods, CA, where a lot of the units are Co-ops. Can a TOD Deed be done on Co-ops?
In a cooperative building, you generally own stock in the cooperative that is equal to your specific unit, and that ownership is evidenced by a stock certificate. You also get a lease to the residence giving you the right to live there. If you attempt to use a TOD, there’s does not appear to be a way to record the TOD against the co-op because you don’t actually own the real estate, as you would with a condo. And I do not believe you can record a TOD for shares of stock, which is all you get with a co-op.
That’s why they’re not generally used with co-ops, and you see them used more frequently with condos, townhomes and single-family homes.
You may want to speak to an attorney to get legal advice on this as this is simply an “opinion.”
Regarding beneficiaries, can the TOD read something like this:
Joe Blow, my husband, for life
Joe Blow Jr. and John Blow, my sons, for the remainder.
My intention would be that the house would pass 100% to my husband if I die before him.
If we both die, it would go to our sons. Thank you.
Typically with the scenario you have identified, a living trust would be the appropriate estate planning documentation. Seek legal advice from an an attorney for clarification. Let us know if you need assistance with that paperwork.
When you file a VOD, are you also required to file a Change in Ownership Statement? Thx.
Typically not because it is not a “true”
deed.
Typically it is not required because a TOD deed is NOT a true deed.
Thanks for your prompt & helpful replies!
Do I need to bring the actual deeds to the county recorders office after i get the TOD’s filled in and notarized?
Thx
There are specific statutory requirements to validate a Transfer on Death Deed. If you are unsure about the process, I would either get legal advice from an attorney or hire a professional like our office who can assist you.
We filed a TOD deed for my FIL with his children as the beneficiaries. It was filled out correctly and filed timely.. He has since passed away and his house is in escrow. The title company is telling us we should have filed the “common questions about how to use this form” along with the TOD and since we didn’t, we will now have to go through probate. Is this correct?
I cannot tell you whether it is correct or now; however the title company is the one that insures proper title and chain of title so if they are indicating there was a problem with the TOD document, for whatever reason, there probably was. This is why we do not recommend using this document as a estate planning tool. There are simply too many loopholes that could create problems. If you need to file probate, however, we would be able to help you.
We are in the exact same boat as of today. Trying a different title company. Can’t find what form ‘common questions’ to which the original title company is referring. Any help?
I am not clear on what you are trying to do. Would suggest you call the office at 800-747-2780 to speak to someone in person.
It’s my understanding that properties of a million dollars or more, automatically go to probate. What criteria is used to determine the value of a dwelling – the assessors value or “other” – thanks for an informative article.
Unfortunately probate is typically required for estates under a million. In California, unless the decedent has set up a trust or some other vehicle for distribution on death, estates valued in excess of $150,000 (personal or real property) or estates with real property are settled through some type of probate. Estates over $150,000 require full probate. The value of property is determined by the probate referee, an individual approved to perform these special services for probate matters.
Then a TOD document is probably not the best instrument to use for any real estate in excess of $150,000 /? As most California real estate is rated at inflated prices – would it be best to pursue a living trust instead?
I would agree with your assumption that a living trust is a better estate planning tool.
Bejay, you’re ignoring the fact that the whole basis of Sandy’s article was that a TOD deed allows one to AVOID probate. Since probate only kicks in OVER $150,000 then clearly this is a valid approach for real estate worth more than that amount.
Ted you assumption is correct; however I do not advocate using a TOD for many reasons. They have been very problematic since inception of the statute, sometimes even invalid, and often the heirs are unable to get title insurance on the real property afterwards.
How is the cost basis for tax purposes determined with a TOD vs a Living Trust?
You would have to speak to your CPA for an answer to this question. We cannot advise you on this.
Can you use a TOD for bare land property? That you own?
Please refer to Section 5610 of the bill which states: 5610. “Real property” means any of the following:
(a) Real property improved with not less than one nor more than four residential dwelling units.
(b) A condominium unit, including the limited common elements allocated to the exclusive use thereof that form an integral part of the condominium unit.
(c) A single tract of agricultural real estate consisting of 40 acres or less that is improved with a single-family residence.
After the TOD is filled out, can I record it by mail? I do not live in the same county as my mother.
There are very strict requirements regarding dates of signing and date of recording so you may want to make sure you understand the timeline so that it is not declared invalid.
Vanguard does not allow beneficiaries on nonretirement joint accounts. Is there a simple way to create a trust or other document that would allow the assets in the joint nonretirement account to pass to my son and daughter?
We can certainly help you prepare a trust for a very inexpensive cost if that is what you would like to do. We have a lot of information on our website about the benefits of having a living trust. Call us at 800-747-2680 for more information.
A TOD was recorded for my mothers home. She has since past. What are the steps I need to take to complete the transfer?
Please call the office if you need assistance with submitting the required paperwork to show the death of the property owner. Tel: 805-648-5540
Also, from the above question, is there a time frame in which this needs to be completed?
We are not aware of any specific deadline however speak with an attorney for specific legal advice on this.
I own a sfr in my name as sole and separate property. I am now remarried and want to add my husband. Is a TOD better than a grant deed, quit claim deed or interspousal deed? which is the better deed to file to add him and we can both have join title. what are the pros and con of the different type of deeds?
We cannot advise you as to the best way to take title but we do have information you can read on our website. I can say the TODs do have downsides. Furthermore a TOD is not a deed transfer but rather a beneficiary vehicle after death. Once you know which direction you wish to take, contact our office to prepare the necessary real property transfer paperwork. It may also be important to look at your estate plans which we can help you with as well.
Do you need a title insurance to transfer real property in California by grant deed between siblings?
Many transfers do not require title insurance. Just like other insurance you may elect to purchase, title insurance is also optional unless required by a lender. Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. It also protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy. If the parties are not concerned about the potential of these things, then getting title insurance may not be necessary.
For purposes of determining eligibility for small estate administration, would you count real property covered by a transfer on death deed?
A transfer on death deed transfers the property on death. Therefore it is probably not part of the estate for probate purposes. The purpose of a TOD deed is to bypass probate.
Can a property with a loan be transfered without paying taxes? Any attorney you can recommend in the Whittier Ca area?
Are you referring to paying a transfer tax? There are several options when we prepare deeds that avoid paying a transfer tax. We will provide those options at the time of the initial interview. You don’t need an attorney to prepare a transfer deed. We routinely prepare these types of deeds.
Sandy, thank you for this info. Question: I know real property gets ‘step-up value’ in a Liv Trust; Does real property in TOD get ‘step-up value’ upon the death of the owner?
I would check with the person who does your taxes to get an answer to this question.
Hi I have a recorded TOD. I also have a death certificate from the same county. What paper work do i need to record wirh the recording office to change this title to the beneficiary
If you require assistance with preparing the required paperwork, please feel free to give our office a call at 800-747-2780.
A little off subject, but I think you can help…
My father added me as JOINT TENANT on his house deed. After he passed in Sept. Of 2013, I filed necessary paperwork through the use of a lawyer to have his name removed from the title, thus then the house was soley in my name. Same lawyer told me I didnt need to file probate, so I didn’t.
However, 4+ years later and I haven’t been able to cash any of the checks that come in the mail addressed to TO THE ESTATE OF my late father. I since sold the house and live in OK now. Wells Fargo (the mortgage holders who the loan was through) mailed me the final escrow check of $2000 and named my late father on the check because the loan remained in his name throughout the time I was making the mort. payments until I sold it.
Now, WF says I need legal proof that I am the executor of the estate, in order to change it to my name (which is stupid, if I had that I wouldn’t be needing the name changed!).
What advice can you give me?
Thank you, so glad CA is finally taking a step to make things a little easier for people going through a difficult time.
How many checks do you have? Are they still cashable? What is the total amount you are talking about. There is probably an easy solution.
Hi – From reading your comments, it appears that in California any property over $150,000 has to go through probate and a TOD will not be sufficient to avoid probate? Please advise.Thanl you.
Hi Amelia – I am not sure what comment you are referring to that brings you to this conclusion. You may have misunderstood something. Obviously if you need legal advice you should speak with an attorney. The TOD had nothing to do with a value limit.
Can beneficiaries of a TOD reside in other states or must all beneficiaries have residence in California?
I don’t not believe the California statute requires the beneficiaries to reside in California. You may want to review the wording in the statute or speak to an attorney to confirm.
The assumption seems to be that only one parcel is allowed and it can be up to 40 acres. My property is made up of 4 parcels (and a good deal less than 40 acres). Since the deed lists all four parcels with four APN numbers, for one address, will a TOD Deed work for me or not? Thank you.
I would get clarification from an attorney who fully understands this new California statute. Once you have your answer, we can help you prepare the Transfer in Death paperwork, although if I were you, I would give strong consideration to other more comprehensive estate planning options. And An Attorney can help provide you with needed insight to make the proper decision.
sandy: wondering if a “deed upon death” can be recorded on a commercial property in California
Unfortunately I cannot give you legal advice on this particular question but I would refer to the statute governing transfer on death deed‘s. It is pretty clear and specific about what properties they can be utilized for. personally I I’m not a great advocate of the transfer on death deed as I have seen too many problems with them once the person dies.
Hi Sandy,
Is it necessary to file oneTOD for my husband and onether for me (both of us are co-tenants of our house), both of us naming the same beneficiaries (our 4 adult children)? We are contemplating on doing this, on the event that both of us dies at the same time, considering that we travel together (by air, sea, land)? We just want to be sure that the house goes to our children in case of our untimely death together. Or will one TOD (for any of us) suffice?
Thank you for your advice.
I do not promote using TODs
as an estate planning tool. Our office has too too many problems that people suffer who have tried this approach and we have even seen several situations where a family has had to file a probate. Would suggest you consider the more common estate planning tool such as a living trust. Obviously talk to an attorney if you need legal advice.
Can a tod deed used for empty land (lot)?
Our office does not recommend the use of TOD deeds because since the implementation of the statute they have been very problematic for people. We will prepare them if a client insists. However, if you need legal advice regarding their usage in your particular situation, you will need to speak with an attorney.
Is a TOD, in the State of California, notarized and signed, BUT NOT RECORDED by the Beneficiary until AFTER the death of the individual, VALID? If it is INVALID must the Estate then be probated?
I doubt that the document would be valid because there a specific criteria for the TOD documents. This is one of the reasons why we do not recommend TOD as an estate planning tool. If you need to file probate please give us a call at 800-747-2780.
I had legal full power of attorney for my mother since 2013, including all real property transactions. My mother would never set up a living trust, She had a will, which clearly states that I am the beneficiary of her assets. she became abruptly ill this past August. She became incoherent and could not competently sign any legal papers, and died from lung cancer. On the advice of a financial planner, I was recommended that legally I could sign the TOD Deed as transferor. I did this 2 days prior to her passing. I also filed it in the Santa Clara County Court system before her death. My question is can I Legally act as transferor because I had uniform power of attorney for my mother, and she was unable to understand what she was signing. I am the only heir, there is no other assets in her estate. She had verbally told me before she became ill that she would give me the the property. I’m trying to sell the property now. Title companies will not ensure the title transfer because the TOD Deed directly benefits me (Isn’t that the whole point of a TOD Deed?). If I go through probate, since I am the only hier, I will get the condo anyway, And it will be extremely expensive.
Hi Sharon – Unfortunately you probably will have to go through probate. Our office never recommends TOD documents as they are extremely problematic as you have discovered. If you want to proceed with the filing the probate, we can certainly help you at a far less cost that an attorney. We could even help you with the paperwork to be able to sell the property during the probate proceeding. Let us know if would like help. You can reach us at 800-747-2780.
Hi Sandy, My mother has a great deal of delinquent credit card debt and no way to pay it (she is 86 years old). Currently she only has a will, and she has willed the condo show owns outright to me. I understand that creditors can force the sale of the condo upon her death to extinguish her debt. A revocable trust also leaves the asset exposed to creditors (where an irrevocable trust would protect it). But since her only asset is that condo, is a TOD a good option, or is the condo vulnerable to the creditors upon her death even though it is signed over to me at that time?
I would recommend that you talk to an attorney to get legal advice with regards to this issue. If she decides to set up an an irrevocable trust, we can certainly help her with that documentation.
Can a 50% interest in a home be deeded through a TOD?
Wecdo not advocate TOD documentation. They are very problematic and are not a good estate planning tool. I would recommend you speak to attorney with regards to your question if you wish to pursue a TOD option.
Great information.
Question: Would there be any reason a home with a reverse mortgage could not have a TOD? Thanks.
Not sure but I am nit a fan of TODs as they have proven to be very problematic and are NOT a good estate planning tool.
Can the beneficiary of a single family California home TOD be a 501C3 charitable institution rather than a person?
I am not sure. We do nit advocate TOD’s as they have been very problematic. you may want to talk to an attorney.