As you probably know, probate is the court administered process of wrapping up a deceased person's estate. It is complicated, time consuming, and costly. For this reason, most people take estate planning steps to avoid probate altogether.
One way to avoid probate for real property is to execute and record a revocable transfer on death deed or “TOD deed.”
How does a TOD deed work?
When you complete the form, you name a beneficiary for your real property. Have it notarized and recorded in the same county as the property in question. When you die, the property will pass to your named beneficiary without probate. To claim ownership, the beneficiary must record an affidavit of death with a copy of the death certificate.
Can I revoke it?
Yes, it is revocable at any time before your death. The revocation should be recorded.
What kind of property can be transferred?
A TOD deed can only be used to transfer the following:
- A parcel of property that contains 1 to 4 residential dwelling units;
- A condo; or
- A piece of agricultural land (40 acres or less) with a single family residence
What about co-owned property?
Your TOD deed will only transfer your interest. To transfer the other co-owner's interest requires a separate form. If you own the property in joint tenancy or community property with right of survivorship, and you die first, your interest will go to the surviving co-owner, not your TOD beneficiary.
Can I name more than one beneficiary?
Yes. If you name multiple beneficiaries, they will become co-owners and take title as tenants in common.
Is a TOD deed better than a living trust?
No. While both avoid probate, and a TOD deed will be cheaper, it offers very limited flexibility for estate planning. For instance, if your beneficiary dies, then you're back in the same boat. You will have to execute a new TOD deed with a new beneficiary, or execute a living trust. A worse scenario is if you become incapacitated, and then your beneficiary dies. You will be unable to execute a valid TOD deed OR a living trust, and your property may go through probate.
A TOD deed is one way to avoid probate for real property, but it is not the best. It should only be used if you are unable to afford a better option, or in a last minute “death bed” scenario.
Helix Law Firm can help you avoid probate
If you are interested in drafting a transfer on death deed, or would like to explore other ways to avoid probate, we can help. We will research the title status of your real property and advise you on your options.
If you're interested in learning more, please call us at (619) 567-4447 to schedule a free consultation.