Transfer-on-death deeds in California: What to know about changes to the laws

| Apr 16, 2021 | Estate Planning |

A transfer-on-death (TOD) deed is one of the easiest ways to make sure that the family home stays out of the probate process when you die — but will it be around forever?

Initially, the law that permitted TODs in California was set to expire already. Thanks to Senate Bill 1305, that deadline has been extended until Jan. 1, 2022 — but what happens if the law isn’t made permanent and expires before you do?

Understanding how SB 1305 applies to an existing TOD

As long as you have your TOD in place before the law expires, it will remain valid — for now. There’s no guarantee, however, that future changes in the law will permit previously valid TODs to remain in place.

Plus, you could run into problems should your plans change and you need to change your TOD in the future.

Understanding how Prop 19 affects your TOD

Proposition 19 went into effect on Feb. 16, 2021. Under the new rules, you can only use a transfer-on-death deed to pass real estate to your children without going through probate if the following requirements are met:

  • You are transferring property that’s worth less than one million dollars in value
  • Your child(ren) intend(s) to make the property their primary residence

These conditions may already make your existing TOD less than useful for your goals — especially given the prices of real estate in California.

As with most estate planning goals, there are usually a number of ways to get the same results — some are generally more secure than others.

TODs have long been problematic because there are a number of situations in which they just aren’t as useful as they might seem. If you have an existing transfer-on-death deed in place, now is a good time to review your options.