California Transfer on Death Deed: What Property Owners Should Know

What happens to your real estate when you die?

It's not exactly everybody's favorite dinner-table conversation.

But if you own a home or other real estate in California, it's an important question—and it's much better to think about it before your family is trying to figure everything out after you're gone.

One estate-planning tool California property owners may hear about is a Transfer on Death Deed, often called a TOD deed or TODD.

A Transfer on Death Deed can allow certain California property owners to name a beneficiary who may receive the property after the owner's death, without transferring ownership to that beneficiary during the owner's lifetime.

That sounds simple.

But as with many things involving California real estate:

The details matter.

What Is a Transfer on Death Deed?

A Transfer on Death Deed is an estate-planning tool authorized under California law for certain real property.

In basic terms, an eligible property owner can execute and record a deed identifying who is intended to receive the property after the owner's death.

During the owner's lifetime, the beneficiary generally doesn't become the current owner simply because the TOD deed exists.

That's one of the reasons some property owners find the concept attractive.

They may be able to establish who should receive the property after death without immediately adding that person to title today.

Why Would Someone Consider a Transfer on Death Deed?

One of the primary reasons is probate planning.

When someone dies owning real estate, transferring that property to heirs can potentially involve a probate proceeding depending on how title is held and what other estate-planning arrangements are in place.

Probate can involve time, expense, court procedures, and paperwork.

A properly prepared Transfer on Death Deed may provide another way to transfer qualifying real property after death without a traditional probate proceeding for that property.

But that doesn't automatically mean it's the best solution for everybody.

Why Not Just Add Your Children to Title Now?

Some homeowners think the easiest solution is simply to add a child or another future heir to the property's title while they're still alive.

That can have consequences.

Adding another person to title gives that person a present ownership interest and can potentially create legal, tax, creditor, financing, or other issues.

Once someone becomes an owner, changing your mind may not be as simple as you expect.

A Transfer on Death Deed is different because it is designed to allow the owner to retain ownership during life while identifying a beneficiary for the transfer after death.

Before choosing either strategy, talk with a qualified estate-planning or real estate attorney and tax professional about your particular circumstances.

What About Joint Tenancy?

Another common way property can pass after death involves joint tenancy with right of survivorship.

When property is properly held in joint tenancy and one joint tenant dies, the deceased owner's interest can generally pass to the surviving joint tenant or tenants outside of probate, subject to the applicable requirements and procedures.

That's useful in some situations.

But again, joint tenancy means the other person is already an owner during your lifetime.

A TOD deed operates differently.

The important point is that there are multiple ways to hold and plan for the transfer of real estate, and they don't all produce the same legal or tax consequences.

What About a Living Trust?

A living trust is another common estate-planning tool.

For many families, a properly established and funded trust can address much more than one piece of real estate.

A trust may provide instructions concerning assets, incapacity, successor trustees, beneficiaries, and the administration of an estate.

A Transfer on Death Deed is generally a much narrower tool.

That doesn't make one universally better than the other.

It means property owners should understand what problem they're actually trying to solve before choosing a solution.

A Transfer on Death Deed Isn’t a Do-It-Yourself Decision

This is where we need to be especially careful.

California's requirements governing Transfer on Death Deeds have changed over time.

There are specific rules regarding eligibility, execution, recording, witnesses, beneficiaries, notices, and what happens following the owner's death.

Those requirements matter.

A document that doesn't comply with current California law may not accomplish what the property owner intended.

Don't rely on an old article, an old form, or instructions you found online years ago.

If you're considering a TOD deed today, make sure you're working from current California law and current forms.

What Happens After the Property Owner Dies?

The beneficiary doesn't simply wave the Transfer on Death Deed at somebody and instantly become the unquestioned owner.

There are post-death procedures that may need to be completed before title can be properly transferred and future transactions can occur.

The exact requirements depend on current law and the circumstances surrounding the property and estate.

That's another reason planning ahead matters.

If your family doesn't know that you've executed a TOD deed—or doesn't know where important documents are located—your attempt to make things easier may not be as helpful as you intended.

A TOD Deed Doesn't Eliminate Every Possible Problem

Avoiding probate for a particular property doesn't mean eliminating every issue associated with an estate.

Questions can still arise involving:

• Existing mortgages

• Property taxes

• Liens and judgments

• Creditor claims

• Multiple beneficiaries

• Family disputes

• Eligibility requirements

• Tax consequences

• Capacity or undue-influence allegations

• Other estate assets

That's why a TOD deed shouldn't be viewed as a magic piece of paper that replaces comprehensive estate planning.

It is one possible tool.

The Title Company’s Role Is Different From the Attorney’s Role

This distinction is important.

As title professionals, we deal with the effect that deeds, ownership, liens, probate matters, trusts, and other documents can have on a real estate transaction.

But deciding how you should structure your estate is a legal and potentially tax-related decision.

That's where a qualified California estate-planning attorney and, where appropriate, a tax professional come in.

A title company can help determine what may be required from a title-insurance and closing standpoint when a property is eventually transferred or sold.

Those are different roles.

Don’t Wait Until There’s a Crisis

Estate planning is one of those things people tend to put off.

Nobody expects tomorrow to be the day their family suddenly has to deal with their property.

But eventually, every piece of real estate changes hands.

The question is whether you've created a plan for how you want that to happen.

If you own real estate in Apple Valley, Victorville, Hesperia, Adelanto, Oak Hills, Phelan, Pinon Hills, Spring Valley Lake, Barstow, or elsewhere in California, consider asking:

How is my property currently titled?

What happens to it if I die?

Does my family know what I've arranged?

Are my estate-planning documents still current?

Those are much better questions to answer now than during a crisis.

The Bottom Line

A California Transfer on Death Deed can potentially be a useful estate-planning tool for qualifying property.

It may allow an owner to identify a beneficiary to receive real property after death while retaining ownership during the owner's lifetime.

But it isn't the right solution for everybody, and California's requirements have evolved since Transfer on Death Deeds were first introduced.

Do your homework.

Get current legal advice.

Understand how your property is titled.

And make sure the estate plan you created years ago still accomplishes what you want it to accomplish today.

Have a Title or Escrow Question?

We're Bobby Tarango and Mike Arias, sales representatives with Chicago Title, and we work with real estate professionals throughout the High Desert to support their title and escrow needs.

Through ChicagoTitlePro.com and TitlesEverything.com, we share real estate information and resources designed to help real estate professionals, buyers, sellers, and property owners better understand title, escrow, ownership, and the many moving parts of a real estate transaction.

If you're dealing with a property involving a trust, probate, Transfer on Death Deed, or another title question, reach out to Bobby or Mike about the title and escrow side of the transaction.

For legal advice about creating, changing, or interpreting an estate plan or Transfer on Death Deed, consult a qualified California attorney.

Bobby Tarango & Mike Arias
Chicago Title
Title & Escrow

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