Effective January 1, 2016 through January 1, 2021, California Assembly Bill 139 creates California Probate Code §5642 to provide a low cost alternative to avoid probate for individuals that own real estate.  The new California Revocable Transfer on Death Deed (aka “TOD Deed” and “Beneficiary Deed”) is intended to work just like a bank account that is labeled transfer on death, or paid on death.

Pursuant to this new legislation, a single individual can execute a California Revocable Transfer on Death Deed (“TOD Deed”) which will only transfer the property to the named beneficiaries upon the death of the owner.  The owner is free to change his or her mind and can revoke the deed at any time during his or her life.    To be effective, the California Transfer on Death Deed (TOD Deed or Beneficiary Deed) must not only be properly prepared, but also notarized and within 60 Days of being signed and notarized properly recorded with the County Recorders’ Office to allow the transfer of real estate outside of probate upon the death of the owner. 

The California Revocable Transfer on Death Deed (“TOD Deed”) does NOT, during the owner’s life, affect the Owner’s ownership rights, or ownership interest.  The California Revocable Transfer on Death Deed (“TOD Deed”), unlike an irrevocable trust, does not remove the property from the owner’s estate for the purpose of Medi-Cal eligibility and reimbursement.

Requirements For a Revocable Transfer on Death Deed (TOD Deed) to be Valid.

1.      Owner of the Property Must be of Sound Mind.  The California beneficiary deed must be created by a person who is over the age of 18, of sound mind, and not under duress.

2.      The property must be residential and must be 1-4 Units.    The California revocable transfer on death deed (aka “TOD Deed” and “beneficiary deed”) can only be used to transfer a parcel of property in California that contains 1-4 residential dwelling units, a condominium unit, or a parcel of agricultural land that is less than 40 acres and contains a single-family residence.  It cannot be used to transfer commercial real estate or a large residential apartment building.

3.      Owner of the property must be single.  It is intended to be used only by single people, as married couples have the option of community property with the right of survivorship.  In fact, the California transfer on death deed is void if the property is titled as joint tenants, or as community property with right of survivorship.

4.      Beneficiary’s Name must be specifically set forth.  The owner can name any person or organization or multiple individuals by name, but he cannot say “all my nieces and nephews.”   If multiple beneficiaries are named, they will become equal co-owners of the property.

5.      The California transfer on death deed  (also known as a beneficiary deed) must be revocable. The owner must be free to revoke it, alter it, amend it, at any time.

6.      The California transfer on death deed must be signed, dated, notarized, and with 60 Days of being signed properly recorded with the County Recorders’ Office.

It should be noted that the new California revocable Transfer on Death Deed should eliminate the need for many single people in California to spend $3000+ on the creation of a trust, but it will not eliminate other necessary estate planning documents such as an advanced health care directive (living will) which every individual over the age of 18 should have, a power of attorney, or a will to dispose of personal assets and to provide after life instructions.  It should also be noted that the California Revocable Transfer on Death Deed has some drawbacks, namely it cannot provide for contingent beneficiaries (an alternative in the event that the Owner’s first choice predeceases the Owner), a guardian for a minor child or a conservator for a disabled adult.  It is merely a means by which a single person can transfer his or her property immediately upon death to a competent adult beneficiary without probate and without a trust.

A copy of the Simple Revocable Transfer on Death (TOD) Deed is available here.