Passing down a residence can be done cheaply and simply with a transfer on the deadly deed. Here’s what you need to know about the transfer of death deeds in California.
The “Revocable Transfer on Death Deed,” also known as the “beneficiary deed,” is a simple and cheap option for passing down a residence to beneficiaries without involving probate. The current owner or “transferor” names the intended heirs as “beneficiaries.” On January 1, 2016, a California law went into effect that offered an alternative to keeping one’s homes out of probate but it expired on January 1, 2022.
Understanding Transfer on Death Deeds in California
The deed has no effect until the transferor dies and when they die, the beneficiaries receive the property without going to court. However, they are expected to notify all heirs and file or record several documents. Notice to heirs must be served by mail in a specific format. Then the beneficiary should record an affidavit verifying service of notice to the owner’s heirs.
The transfer on a death deed is considered a non-probate method for transferring property to a named beneficiary. It can only be used to transfer a property that meets one of the following:
- A single-family home or condominium unit
- A single-family residence on agricultural property of 40 acres or less
- A residence with no more than four residential dwelling units
Related to: What is an Interspousal Transfer Deed in California?
Criteria For Transfer on Death Deed in California
The new transfer on a death deed allows an owner of residential real property to name one or more beneficiaries to receive the property upon their death. Therefore, a transfer on death deed may be a great option for a person whose only asset is their home. When considering a revocable transfer on a death deed, one must meet the following:
- Transfer a single-family home or condominium unit; multiple residences of not more than four residential dwelling units; or a single-family residence on no more than 40 acres of agricultural land
- Sign and date a revocable Transfer on the Death deed before witnesses
- Recorded within 60 days or less from the date it is signed
Pros to Transfer on Death Deeds in California
- Avoids probate
- Can be revoked at any time during the lifetime of the transferor
- Simple, inexpensive alternative to a living trust
- Same tax advantages as transfers by trust or inheritance under a will
Cons to Transfer on Death Deeds in California
- Technical requirements are simple but strict and errors can void the deed.
- The home is not protected from debts so the beneficiaries could receive nothing after the mortgage and debts are paid.
- Title companies may refuse to issue title insurance for three years after the death, blocking sales or refinancing of the property
- Beneficiaries must take several steps to transfer the property, including notifying any possible heirs which then allows them to challenge the deed.
- In the case that a beneficiary dies before the transferor then the share will not go to their heirs but rather to the remaining beneficiaries to split. In the case that no beneficiaries survive the home will most likely go through probate.
Related: 7 Types and Examples of a Wrongful Death Case
Preparing Transfer on Death Deeds in California
A Transfer on Death Deed is prepared correctly if the preparer does the following:
1. Fills out all general required identification and address information
The “Assessor’s Parcel Number” and “Property Description” should completely match the description from the property’s current deed, or else it may be invalid.
2. Names beneficiaries
Do not use broad categories such as “my children” or “my brother,” rather, list the full legal name of each beneficiary clearly. In the case of multiple beneficiaries, make sure to indicate how they will take title to the property.
3. Signs and date the Transfer on Death Deed in front of witnesses
Recent California laws state that anyone of general competence may act as a witness to a California Transfer on Death deed. This should not be done by one of the deed’s beneficiaries, as California’s statute presumes that an interested witness improperly influenced the property owner to sign the deed.
4. Has the notarized deed recorded with a local county clerk’s office
Remember that the law requires one to record the deed within 60 days of the deed’s notarization, otherwise, it will be nullified. This can be done by mailing or bringing the deed to a local county clerk’s office. Come prepared to pay potential filing and recording fees.
Transfer on Death Deed Expirations
If the law expires, the Transfer on Death deed will remain valid as long as it is executed before January 1, 2022. However, with the uncertainty of the status of this law, there is no guarantee that future changes to the law may not have an effect.
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