Understanding Revocable Transfer on Death Deeds in California

Contact Our Berkeley Estate Attorneys to Learn More

California lawmakers passed Assembly Bill 139 (AB 139) in September 2015. Prior to the passage of this law, which went into effect on January 1, 2016, certain homeowners had a more difficult time ensuring their homes would not go through probate after death. Probate court is a process where the future of your assets and belongings pass to your heirs. However, the process is expensive and time-consuming for everyone involved.

About California's Transfer on Death Deed

AB 139 created the “simple revocable transfer on death deed”, which gave homeowners more options for quickly transferring ownership than they had prior to 2016. Homeowners can use a will or a living trust to pass their homes onto their loved ones. Additional Californians may inherit a home due to joint tenancy or community property with rights of survivorship.

The revocable transfer on death deed can simplify matters for certain people who want to pass an eligible residence to a named beneficiary. By using this option, you can transfer an eligible residence to a beneficiary of your choosing by signing a simple revocable transfer on death deed and having it notarized within 60 days. You can also revoke the deed at any time of your choosing.

Who Can Use a Simple Revocable Transfer on Death Deed?

AB 139 helps certain middle and low-income homeowners who have single-family homes or condominiums as well as residences with four or less residential dwellings. If you have a single-family residence on agricultural property that encompasses 40 acres or less, then you can also use this deed.

Are There Benefits to a Revocable Transfer on Death Deed?

AB 139 was primarily created to help low and middle-income homeowners avoid the expenses associated with probate court without having to spend money establishing a trust. Probate court can incur thousands of dollars in expenses, especially in cases where taxes, debts or complicated assets are part of the estate.

AB 139 provides a quick and inexpensive option for passing your home to a beneficiary after your death. There are also tax benefits provided by AB 139. Your spouse would not have to pay taxes on the property because the IRS considers adding a joint tenant as a gift. If you lack the time or means to establish a trust, then the revocable transfer on death deed could also make matters easier for you and your beneficiary.

Some families benefit from AB 139 more than others. For instance, a single (unmarried or not in a domestic partnership) tenant can use this option to pass his or her home to a specific beneficiary.

Married couples or homeowners with domestic partnerships may own their homes through joint ownership or community property. The home would pass to the surviving spouse or partner.

Are There Downsides to a Revocable Transfer on Death Deed?

Depending on the circumstances, there are a couple of downsides to using this option. If your beneficiary dies before you do, then your property may have to go through probate court if you do not have an alternative estate plan established.

Additionally, there could be issues with this process if you name a minor as your beneficiary. Your beneficiary would not receive full ownership over the property until they turned 18 years old. Ownership would transfer to a court-appointed custodian until your beneficiary's 18th birthday.

Unsecured debts or prior Medi-Cal benefits could also complicate the transfer of your home to your designated beneficiary as he or she would assume responsibility for these debts. You should consider whether it is possible to pay back certain Medi-Cal benefits you received or unsecured debts before your passing.

A revocable or irrevocable living trust can help you avoid some of the cons associated with a transfer on death deed. When a trust is used in conjunction with other estate planning tools, your assets can avoid probate and other legal complications after your death.

Call Our Berkeley Estate Attorneys for More Information

Trusts can be a safer way to protect your assets, including a home, after your passing. Our Berkeley estate attorneys can review your financial situation and other factors that could affect your ability to pass property to your loved ones. The attorneys at Davidson Estate Law have more than four decades of experience helping families in the Bay Area with complicated estate matters.

If you have questions about a revocable transfer on death deed or establishing a trust, then we encourage you to reach out to us for help by calling. You can also use the contact form we have on our website.