For most of us, there are no satisfactory alternatives to estate planning. It is almost always the best way to ensure that your property and assets go where you want them to, and that your end-of-life wishes are recorded and honored.
But estate planning may not seem attractive to someone whose only significant asset is their home. For people in this situation, California legislators recently created an alternative plan to pass along personal real estate. It is known as a transfer on death deed. This plan has been available since the beginning of 2016.
The way a TOD deed works is fairly simple. Let's say that you own a home that you want to give to a friend when you pass away. Traditionally, the way to do that would be to create a living trust or to include the property in your will. But if you have no other estate planning needs, you could use a TOD deed instead.
Once the document is signed and notarized, your retain ownership until you pass away. It is then transferred to the named beneficiary. You can choose to revoke the TOD deed at any time, and you can also change the intended beneficiary. If more than one TOD deed has been signed and notarized, the most recently dated one will be considered authoritative and legitimate.
Although a TOD deed may be a good option for some people, it does have its limitations and risks. For instance, it does not account for a situation in which the original property owner becomes incapacitated but remains alive. And if the named beneficiary passes away before the property owner does, the deed is essentially void.
One of the biggest goals of estate planning is to transfer property and assets while avoiding probate. Although the TOD deed could certainly achieve that goal, its limitations should be considered.
If you have any questions about TOD deeds or the estate planning process, please contact an experienced estate planning attorney here in California.