If you live in California, you may be able to transfer your real property to your heirs upon your death without going through the probate process. By naming a specific beneficiary or beneficiaries on their deed, a California property owner can transfer ownership of their property to their heir using the revocable transfer on death deed.

Because the deed is revocable, the current property owner can change their mind on who to name as beneficiary up until their death. They have complete control over their property throughout their lifetime. A transfer on death deed does not preclude a homeowner from selling, transferring, or mortgaging their property throughout their lifetime.

What is a Transfer on Death Deed?

California enacted the transfer on death deed in 2016. The law was initially set to expire in 2021, but it has been extended through January 1^st, 2032. The transfer on death deed provides a simplified process to transfer ownership of property from a grantor or property owner to a beneficiary without going through the probate process. It is an alternative to creating a living trust.

Benefits of a Transfer on Death Deed

The primary advantage of a transfer on death deed is that it enables homeowners to avoid the probate process when transferring ownership of their home to their beneficiaries. The probate process can be complex, time-consuming, and expensive. This public process can potentially lead to conflicts among potential beneficiaries.

A transfer on death deed is a simpler process that clearly states whom the homeowner wants to inherit their property. It is a revocable deed, which means the homeowner can update it throughout their lifetime. This can be important if family situations change due to marriage, divorce, births, or deaths. These key events should trigger a reminder to everyone to update all their accounts and their estate plan.

Disadvantages of a Transfer on Death Deed

A revocable transfer on death deed can be updated throughout a homeowner’s lifetime. However, if they neglect to update the deed and the named beneficiary passes before the homeowner unless there are directions for transferring the home in the estate plan, it will go through the probate process. There is not an option to name contingent beneficiaries on the deed.

If you co-own a property under joint tenancy with right of survivorship or community property with right of survivorship, your co-owner will become the sole owner of the property and has full control of the property upon your death, whether you created a transfer on death deed or not. A co-owner’s rights to own the property take precedence over those of a named beneficiary on a transfer on death deed.

If both co-owners name the same beneficiary or beneficiaries on their transfer on death deed, the property will pass to the intended recipient upon the death of the surviving co-owner. The surviving co-owner has the right to change the transfer-on-death deed throughout their lifetime, so there is no guarantee that the person the deceased co-owner intended to receive it will do so.

Having a transfer on death deed does not impact a California homeowner’s eligibility for Medi-Cal because the deed does not go into effect until the homeowner dies. However, the new homeowner may be held liable for reimbursing Medi-Cal expenses paid before the homeowner’s death.

Only the following property types are eligible for a transfer on death deed:

• A single-family home or condo unit
• A single-family home that sits on an agricultural property of no more than 40 acres
• A residence with no more than four residential dwelling units

Transfer on Death Deed Process

To transfer your property in California using the transfer on death deed law, take these steps:

1. Complete the transfer on death deed form, including your property’s parcel number and property description.
2. Name your beneficiary or beneficiaries.
3. Sign and date the deed in the presence of a notary and two witnesses.
4. Record the deed with the county clerk’s office within 60 days of it being notarized.

The transfer on death deed becomes legally effective when the homeowner dies. Ownership of the home passes automatically to the named beneficiary. The beneficiary will need to notify other potential heirs of the decedent that they are the new owners of the property and the county land records office of the property owner’s death.

Since the transfer on death deed does not provide a warranty of title, the beneficiary may wish to purchase title insurance. The beneficiary is responsible for paying any liens, mortgages, or encumbrances recorded against the property. If the previous homeowner owed taxes or received Medi-Cal benefits, the beneficiary may be obligated to settle these accounts.

If you reside in California and own property that you would like to transfer to your beneficiaries without the need to go through the probate process, contact a Katzner Law Group estate-planning attorney. They can help you consider all your options and develop a plan. Joint ownership, mortgages, creditor protection, and other factors such as potential Medi-Cal and tax liabilities can impact your estate plans.

Give us a call today at 866-395-1786 or contact us online to schedule a meeting and discuss your unique financial needs. Let us be your trusted partner on the path to financial success.