New Special Deed Adopted in California!

New to California law in 2016 is the adoption of a “Revocable Transfer on Death Deed.”  So, what is it, and is it right for you?

Without delving too deep into estate planning, when you die, unless you have taken certain measures, your things (i.e., your “estate”) typically go through an expensive and time-consuming process called “probate” before your beneficiaries receive them.  With respect to a single-family residence (“house”), the manner in which your interest passes to someone else is dependent on a few things, including how the property is titled, such as “community property with a right of survivorship,” etc., and whether you have any estate plan in place, such as a will or a trust.

If you are married, and title of the house is in both you and your spouse’s name jointly “with a right of survivorship,” then your interest in the house will automatically pass to your spouse upon your death.  But what if you are single?  What if you are widowed?  How could you potentially pass along your house to, say, your children when you die without your children having to go through (and pay for) probate to get it?  Is there a way to avoid probating the house?  Enter a “Revocable Transfer on Death Deed.”

With a Revocable Transfer on Death Deed (“RTOD Deed”), if you are single, you can name a beneficiary who will receive the house upon your death outside the probate process.  “What if I change my mind?” you ask.  The good news is that it is “revocable” (i.e., it can be taken back) at any point up until you die, provided you are still mentally competent.  Another attractive aspect of the RTOD Deed is that it does NOT give any beneficiary named on the deed a “present interest,” which means any creditors of the beneficiary cannot go after the house until the house has actually passed to the beneficiary.  For a single-person who does not have a large estate–other than a house–a RTOD Deed may be a great option since you can use the RTOD Deed to avoid probate with the house, and you may be able to avoid the fees associated with the creation of a trust.

So, what can you take from this message?  If you are married, you should investigate whether an estate plan, including a living trust, is right for you.  And, if you own a house, you should examine how title on your house is held so you can know how your interest in the house will pass upon your death.  On the other hand, if you are single (including being widowed) and you own a home, investigate whether a RTOD Deed is right for you.