How to Avoid Probate with a Transfer-on-Death Deed
Planning for what happens to your assets after you're gone is important for protecting your family’s financial security and peace of mind. One of the more accessible and efficient tools available to those looking to bypass probate is a transfer-on-death (TOD) deed. A transfer-on-death deed is a legal document that specifies which beneficiary will inherit the deceased's real estate after their passing.
Whether you’re looking to create a TOD deed or need help setting up an estate plan, an experienced attorney can help you through the process. Located in Redlands, California, The Elder & Disability Law Firm, APC offers kowledgable estate planning services for clients in Southern California, including Redlands, Riverside, Rancho Cucamonga, and Palm Springs.
This blog examines the steps, benefits, and legal considerations associated with creating a transfer on death (TOD) deed in California as well as the importance of working with a seasoned attorney.
What is a Transfer-on-Death Deed?
A transfer-on-death (TOD) deed, also known as a beneficiary deed, is a legal document that allows property owners to name a beneficiary who will automatically inherit their real estate upon their death.
Unlike a traditional will, a TOD deed allows for a direct transfer of property without requiring the real estate to go through probate. Once recorded, the deed goes into effect only after the original property owner passes away. This can be helpful if you primarily want to pass down your real estate assets while avoiding the complications, costs, and delays that often accompany probate.
How to Create a TOD Deed
Creating a transfer-on-death deed is relatively straightforward compared to other estate planning tools. However, there are specific steps you will need to follow to make sure the deed is set up properly. These steps include the following:
Identify your beneficiary: Choose a person (or multiple people) to inherit your property. This could be a family member, friend, or organization.
Complete the TOD deed form: California offers a statutory form for drafting TOD deeds for a straightforward and legally compliant process.
Sign the deed: The property owner must sign the deed in the presence of a notary public to legitimize the document.
Record the deed: To be enforceable, the deed must be recorded with the county recorder's office where the property is located. Without proper recording, the TOD deed is not valid.
These steps enable the property transfer to occur seamlessly upon the property owner's passing. Until that point, the property remains entirely under the control and ownership of the original owner.
Benefits of a TOD Deed
Setting up a transfer-on-death deed can have several advantages for your estate. Some of the most common benefits include the following:
Avoiding probate: A TOD deed can avoid the probate process, which can save your beneficiaries both time and money. Probate can often drag on for months or even years while accumulating substantial court fees along the way.
Retaining control over your property: A TOD deed does not transfer ownership rights during the property owner's lifetime. You can sell, mortgage, or even revoke the deed without consent from your beneficiaries.
Simple creation: Compared to setting up a trust, setting up a TOD deed has fewer steps, making it a simpler option for property owners with limited assets or more straightforward estates.
Cost-effective: TOD deeds do not require the same legal and administrative fees associated with establishing a trust or processing will-based transfers through probate.
Privacy: Probate records are accessible to the public, whereas transfers via TOD deeds remain private. This allows property owners to maintain their privacy and discretion.
If you're considering setting up a TOD deed for your estate, reach out to an experienced estate planning attorney who can help you determine whether a TOD deed aligns with your estate planning goals. Certain factors such as property values, debts, and family dynamics might influence whether this is the right approach for you and your beneficiaries.
California Laws Governing Transfer-on-Death Deeds
California law regulates transfer-on-death deeds under Probate Code Sections 5600–5696. These laws simplify the execution of TOD deeds while offering protection for both property owners and their beneficiaries. Some of the key legal considerations you should be aware of in California include:
Eligible property: TOD deeds apply specifically to real estate, including single-family residences, condominium units, and up to four-unit residential properties. You cannot use a TOD deed for commercial real estate or properties owned by a legal entity, such as a business or trust.
Revocability: Property owners can revoke a TOD deed at any time during their lifetime. To do so, they must complete a formal revocation form and have it properly recorded.
Contingencies and lien claims: Like other transfers, the property passed down through a TOD deed may be subject to existing liens, mortgages, or tax obligations. Beneficiaries should be aware of these potential encumbrances.
Sunset clause: California's law regarding TOD deeds is subject to legislative reviews and amendments. Consult a knowledgeable attorney who can help you keep up with the latest updates.
How an Attorney Can Help
Completing a TOD deed may seem straightforward, but property transfers have lasting implications for your family and estate. Errors, such as submitting an improperly completed form or overlooking unresolved liens, can create conflicts or legal complications for your beneficiaries.
An experienced estate planning attorney can help you weigh the pros and cons of a TOD deed and explore other options that may be better suited to your situation, such as creating a living trust or updating your will. Legal guidance can help you make informed decisions that reflect your wishes while protecting your family from unnecessary stress and complications.
Whether your goal is to pass down a single property or create a comprehensive estate plan, The Elder & Disability Law Firm, APC offers legal guidance to help you develop the right solutions.
Estate Planning Attorney Serving Redlands, California
Setting up a transfer-on-death deed can be an effective way to pass on real estate without having to go through probate. However, it's important to make sure the deed is created properly and recorded with the applicable county recorder's office to be valid.
If you or someone you know needs help setting up a transfer-on-death deed or creating an estate plan, The Elder & Disability Law Firm, APC offers the legal guidance you need. Located in Redlands, California, the firm serves clients throughout Riverside, Rancho Cucamonga, and Palm Springs. Reach out today to schedule a consultation.