Insights
Publications

California’s New Transfer on Death Deed

12/3/2015 Articles

As of January 1, 2016, California law allows the use of transfer on death (TOD) deeds for real property. A TOD deed is a revocable beneficiary deed, involving the transfer of an individual’s residence (limited to multi-unit properties with fewer than four dwelling units, condos and single family residences with fewer than 40 acres of agriculture land), which does not become a completed transfer until the death of the transferor. Essentially, the deed allows an individual to transfer their property to a beneficiary without the use of a revocable trust or the need of a probate court.

At death, the TOD deed transfers property by operation of law, like joint tenancy or community property with right of survivorship. The transferor remains the sole owner during his or her lifetime and he or she can revoke the TOD deed at any time. The recording of a TOD deed does not change the income tax benefits of owning the residence (think mortgage deduction) nor does it have any effect on property tax.

The TOD deed is a simpler and less expensive option relative to transferring real property through a revocable trust or the probate process. Individuals who do not have significant assets subject to probate and who wish to leave their residence to named individuals could use a TOD deed to accomplish their estate planning objectives, but it does have its limitations.

  • Leaving the property to multiple beneficiaries with a TOD deed creates administrative difficulties as all named beneficiaries become owners of undivided interests in the property. 
  • The benefit of having one’s residence, and all other significant assets, pass through a revocable trust, allows a single trustee to marshal the assets and distribute them as the transferor wishes. 
  • If a transferor wishes for property to be held in ongoing trusts or with other restrictions, then a TOD deed could not accomplish that goal.

A TOD deed, while useful in limited circumstances, does not supplant the need for a revocable trust in many individuals’ estate plans. A revocable trust is still the preferred and best approach to estate planning in California.

Firm Highlights

Publication

Your Retirement Planning and the SECURE Act

The Setting Every Community Up for Retirement Enhancement Act (or SECURE Act), signed into law on December 20, 2019, changes retirement planning significantly and unexpectedly. The bulk of the changes become effective as of January...

Read More
Publication

Wealth Transfer Strategies in Today’s Market

Current market conditions and the federal gift and estate tax laws present wealth transfer opportunities that high net worth individuals may wish to leverage over the near term. Federal Gift and Estate Tax Exemption...

Read More
Publication

Four Tips for High Net Worth Individuals Desiring to Utilize Record-High Lifetime Exemptions

The historically high lifetime exemption amount for gift, estate and generation-skipping transfer taxes increased from $11,400,000 to $11,580,000 per person this year due to inflation indexing. Individuals who had used up their lifetime exemption...

Read More
Publication

Estate Planning During Uncertain Times

Farella's Wine Industry Education Series features Lauren Galbraith discussing "Estate Planning During Uncertain Times." Estate planning for vineyard and winery owners has come to the forefront during this unpredictable pandemic and in light of...

Read More
News

Farella Braun + Martel Recognized in 2020 Chambers High Net Worth Guide for Private Wealth Law in Northern California

SAN FRANCISCO, July 10, 2020: Farella Braun + Martel’s Private Client Industry Group earned recognition in the 2020 Chambers High Net Worth (HNW) guide as a leading firm in the Private Wealth Law category...

Read More
News

52 Farella Braun + Martel Attorneys Listed in The Best Lawyers in America© 2021

Read More
News

Eight Farella Braun + Martel Lawyers Listed in Best Lawyers: Ones to Watch 2021

SAN FRANCISCO/ST. HELENA, CA, August 20, 2020: Eight Farella Braun + Martel lawyers were listed in the inaugural Best Lawyers: Ones to Watch . This recognition is awarded to attorneys who are earlier in...

Read More
Publication

Estate Tax Planning for Large Company Stock Holdings: Four Tips for Using Record-High Lifetime Exemptions

Published on MyStockOptions.com . Key Points Annual inflation-indexing continues to increase the historically high lifetime exemption amount for gift, estate, and generation-skipping transfer taxes. Those of considerable wealth who have not yet made gifts...

Read More