When a “Transfer on Death (”ToD”) Deed” to Real Property works as planned, it has the effect of transferring title of real property to a named beneficiary upon the death of the owner[s], while avoiding probate. However, there as some limitations and consequences to the ToD, which include not being able to name backup beneficiaries, the need of the beneficiary to notice heirs apparent on transfer, a three-year statute of limits to challenge the ToD & there resultant potential impossibility to obtain title insurance for three years and concomitant inability to sell for three years, among others.
DETAILS
A Transfer on Death (”ToD”) Deed is a relatively new California law that allows real property to be transferred from the owner to a person that the owner identifies, and that transfer requires only the filing of an Affidavit of Death, meaning the transfer avoids the time and expense of the process called probate.
The law pertaining to “Revocable Transfer on Death Deed[s]” is codified at Probate Code sections
A person can transfer his or her own interest in real estate to named beneficiaries.
What type of property can be transferred using ToD?
Residential property that is under 40 acres, only.
Who can receive property through a ToD?
A person, a trust, or an entity can receive an interest in real estate through a ToD.
What interest can be transferred through a ToD?
A person’s entire, undivided interest can be transferred through a ToD.
However, there are some consequences to Executing and Filing a ToD Deed, including the following.
If the beneficiary or beneficiaries pass before the owner, the ToD Deed is void.
If the beneficiary or beneficiaries of the ToD are minors at the time of death of the owner, the Court must appoint a custodian, which can be, but may not be instructed in a will.
If the owner who is the grantor of a ToD deed becomes incapacitated before death, then the ToD cannot be revoked by that grantor, and the ToD Deed will prevent a sale of the property or a loan against the property.
Also, most title insurance is voided by recording of a ToD Deed, and many title insurers require a 3-year waiting period to issue new title insurance, after a ToD Deed is recorded, which may have the effect of a beneficiary not being able to sell the property for three years.
