California law allows a transferor (party who owns the property) of real property to name a specific beneficiary or multiple beneficiaries, who will inherit the real property upon the transferor's death. Currently the law is set to continue until January 1, 2032, unless the legislature passes additional legislation to extend the law pass the current sunset date. 

Transfer on Death Deeds require that the transferor execute a deed naming a beneficiary or multiple beneficiaries before a notary, and requires two witnesses. It will also need to be recorded in the county in which the property is located no more than 60 days after the deed is executed. These types of deeds are available for improved parcels of land with one to four residential units, and includes condominiums. 

The Transfer on Death Deed can be a great tool for those who have smaller estates, with the bulk of the wealth being in real property. It is important to understand that estates that exceed $184,500.00, and are not jointly owned with a right of survivorship, or put into a trust, or have a beneficiary designation, will be required to pass through probate. Keep reading to help understand the benefits and potential disadvantages of recording this form on your property. 

Benefits

There are several benefits of Transfer on Death Deeds, making them a great option for some transferors.

1. Avoids Probate: If you properly execute a Transfer on Death Deed, the property will not be subject to probate proceedings so long as the beneficiaries are still living upon your death. If your estate consists of other assets that are not otherwise disposed of through non-probate transfers, those assets will still be subject to probate.
2. Revocability: The Transfer on Death Deed is fully revocable prior to your death. The transferor retains all title and right to encumber, sell, or otherwise dispose of the property prior to their death. 
3. Low-Cost: Transfer on Death Deeds are relatively simple to execute, and are a fraction of the cost of creating a Will or a Trust. The costs incurred typically consist of deed preparation, notary, and recording fees.  
4. Simple Transfer for Beneficiaries: After the transferor dies, the beneficiary or beneficiaries will need to record evidence of transferor's death, a change of ownership form, an Affidavit, and send notice to all heirs. This is a much simpler procedure than probate, is quick and is a fraction of the cost of probate.

Disadvantages

It is important to note that there may be some disadvantages depending upon your goals, and potential issues that may arise if a transferor executes the deed, and then forgets all about it.

1. Wishes may Change: In some situations a transferor may designate a beneficiary, and then forget. Estate plans should be reviewed every year or two to account for a change in wishes, family expansion, family dynamics, incapacity or substance abuse issues of the beneficiary or any other change that can render the transferor's previous designations undesirable. 
2. No Control: A Transfer on Death Deed only allows you to designate a beneficiary, or multiple beneficiaries. If a beneficiary dies, their interest will not pass to their children, or another beneficiary you may desire. Additionally, if you only list one or two beneficiaries and you outlive the beneficiaries, the property will be subject to probate. 
3. Special Needs or Substance Abuse: If your beneficiary is later receiving public benefits due to incapacity, or if they suffer from substance abuse issues, they will still inherit the property upon the transferor's death, and can sell, or encumber the property in any way they choose. 
4. No Conditions: A Transfer on Death Deed does not allow the transferor to impose any conditions. If the transferor lists multiple beneficiaries, they will hold the property as tenants in common, each receiving an equal share of the property, with the right to transfer their share.
5. Joint Tenancy: If the transferor holds the property in joint tenancy with another co-owner and they pass away before the other joint tenant, the Transfer on Death Deed will not be effective, the property will pass to the surviving joint tenant. Further, if both owners execute a Transfer on Death Deed, the surviving joint tenant can change the beneficiary or revoke the Transfer on Death Deed altogether. 

If you are considering a Transfer on Death Deed it is important to discuss your options with an experienced estate planning attorney to avoid some common mistakes that may be incompatible with your estate planning goals. The Law Office of Jessica R. Ward assists clients in determining the best way to plan for incapacity and death so that your estate is protected and your wishes are honored. Estate planning is not one size fits all. Contact our office at (925) 459-1777 to speak with Jessica or to set up a complimentary 30 Minute Consultation.