New: Transfer on Death Deeds

 California now allows “transfer on death deeds”, or TOD deeds, to be recorded in California.  This new type of deed allows a homeowner to specify in the deed who will inherit the house upon the owner’s death.  The home will then pass to the named person or persons, without the probate court.
The new TOD deed is a revocable deed which is signed, dated and notarized by the homeowner.  After the deed is signed, the deed must be recorded within 60 days.  Although the deed is recorded, the actual transfer to the named beneficiary does not happen until the homeowner dies.  Then, the house transfers to the named person(s) on the deed, without the probate court or other administration.
The purpose of the TOD deed is to provide an inexpensive option for many homeowners with typically one asset – a house. However, if the homeowner has other assets, concerns about illness/incapacity, the need to manage an inheritance for adult or minor children, disabled family members, or a variety of other reasons, a living trust is still a much better option.  In addition, this new TOD deed does not protect against Medi-Cal recovery, if the homeowner received Medi-Cal benefits (typically for nursing home care).
The legal community has concerns that homeowners will simply sign these new TOD deeds, without proper legal advice.  As a result, they fear homeowners will complicate their situation, make significant and costly mistakes, and fail to consider other very important legal documents such as Health Care Directives and Power of Attorney documents.
The new TOD deed has a limited niche position, but can be a valuable low-cost alternative for many homeowners with limited assets and simple situations.  However, there is no substitute for good, solid legal advice to determine the best approach when dealing with one’s estate planning needs.
For more information, please contact the McNamara Law Firm, PC, at 661-287-3260, or visit our website at www.themcnamaralawfirm.com.