A new law that became effective January 1, 2016 creates a Revocable Transfer on Death Deed (“TOD”) as a way for California residents to transfer residential property to name beneficiaries, effective upon death. Only the following types of property are covered by a TOD deed:
- A single-family home or condominium unit
- A single-family residence on agricultural property of 40 acres or less or
- A residence with no more than four residential dwelling units.
The biggest advantage of a TOD Deed is that it can avoid probate. Also, the preparation and recording of the TOD deed is relatively fast and simple. A TOD Deed can be revoked at any time during the lifetime of the grantor. A TOD Deed should simplify the transfer process at death, as long as the deed is not voided by a drafting error.
The TOD Deed is not suitable for everyone because it has many limitations. First, even if you have a TOD Deed, your property will still be subject to probate if your beneficiary predeceases you and you do not have an alternate estate plan. However, if you have a trust, your trust can specify that if the beneficiary predecease you, the property will go to the beneficiary’s children or other people whom you designated. Second, If your beneficiary is a minor when you die, the court will appoint a custodian to take over the control and management of the property until the child reaches legal age and only then will the child own the property outright. This process many incur legal and court fees. However, if you have a trust , your trust can designate a custodian, making court’s involvement unnecessary, thereby saving of a lot of money. Third, if you have more than one beneficiaries and if one of them die, the deceased beneficiary’s interest will automatically pass to the other named beneficiary. If you have a trust, you can specify if a beneficiary dies, the beneficiary’s interest will pass to his children, not to the beneficiaries. Fourth, if you have more than one beneficiaries and if you want uneven distribution of property to your beneficiaries, then you should not use a TOD deed because a TOD deed cannot achieve it. The beneficiaries on the TOD deed will split the property evenly.
A big disadvantage of a TOD Deed is that a TOD Deed is void if at the time of death, the property is held as joint tenancy. If a married couple own a house as joint tenants, if both the husband and the wife executes a TOD deed, both TOD deeds are void. That will create a big problem. If the wife executes a TOD deed and name her son as the beneficiary. If the wife dies first, the TOD deed is void because the property is held in joint tenancy. After the wife dies, the husband will own the entire property through joint tenancy. If the husband remarries, he add the new spouse’s name to the property and can even transfer the house to the new spouse. If the marriage is a second marriage and each spouse has children from a previous marriage, the issue is even more complicated. Assuming each spouse execute a TOD deed designating their own children as the beneficiaries. If one spouse dies first, the other spouse will own the entire property. That spouse can give away to his or her own children and entirely cut off the deceased spouse’s children.
Furthermore, the TOD Deed offers no protection from the Grantor’s creditors including Medi-Cal Estate Recovery. Because the TOD Deed offers no protection from creditors, the beneficiary may end up with nothing if the debts of the Grantor are larger than the worth of the property. Because there are unsatisfied creditor’s claims against the property transferred via TOD Deed, some title companies are not willing to issue title issuance to the beneficiary until three years after the Grantor’s death. Although the TOD law was written to minimize the use of attorneys, because of the specificity of the form, a consumer may unwittingly void the transfer because of an error in the completion of the form.
There is a sunset date on the TOD Deed. As stated above, the use of TOD deeds is relatively new, and they are not allowed in all states. California has undertaken a five-year trial period for TOD deeds. According to the California legislation, the use of TOD deeds will expire on December 31, 2020.
Because of the disadvantages outlined above, particularly concerns regarding joint tenancy, community property, transfers to minors, and capacity to revoke, some estate planners believe that transfer on death deeds should only be used as a last resort unless there is insufficient time to prepare proper estate documents. You should consult an estate planning attorney whether the use of the TOD Deed is suitable for your family.
一個在2016年1月1日生效的新法規制定了可撤銷的死亡契約轉讓 Transfer on Death Deed (TOD) 。這是一種加州居民把物業轉移給指定受益人的一種方式，轉讓在去世時便生效。 TOD契約僅涵蓋以下類型的物業：
TOD契約的最大優點是可以避免遺囑認證。此外，TOD契約所需的準備和記錄相對快速和簡單。 TOD契約可於成立人有生之年隨時撤銷。 TOD契約應可簡化去世時的轉移過程，只要契約沒有因草擬錯誤而失效。
TOD 契約並不適合所有人，因為它有很多限制。首先，即使您有TOD契約，如果您的受益人比您先去世而您並沒有後備資產計劃，您的財產仍將要通過遺囑認證。但是，如果您有信託，您的信託可以指定如果如果您的受益人比您先去世，財產將將由受益人的子女或您指定的其他人來繼承。第二，如果您的受益人在您去世時未成年，法院將指定一名監護人來控制和管理該財產，直至您的受益人達到法定年齡才能完全擁有該財產。這個過程產生許多法律和法庭費用。但是, 如果您有一個信託, 您的信託可以指定一個監護人而不需法院的介入, 從而省掉大筆費用。第三，如果您有超過一位受益人並且如果其中一人去世，則已故受益人的利益將自動轉移給另一個指定的受益人。如果您有信託，您可以指定把去世受益人的利益轉移給他的子女，而不是另一位受益人。第四，如果您有超過一個受益人，並且您希望把財產不均地分配給您的受益人，那麼您不應該使用TOD契約，因為TOD契約無法做到。 TOD契約只能將財產平均分配給您的受益人。
TOD契約的一大缺點是如果在去世時, 財產以聯權共有 (Joint Tenancy) 方式持有, 那麼, TOD契約便無效。如果已婚夫婦聯權共有房子，而如果丈夫和妻子都執行了TOD契約，兩份TOD契約均屬無效。這將產生一個大問題。如果妻子執行TOD契約並將其兒子命名為受益人。如果妻子先去世，TOD便契約無效，因為該房子是聯權共有的。妻子去世後，丈夫將通過聯權共有擁有整個房子。如果丈夫再婚的話，他可以將新配偶的名字加入物業中，甚至可以將房子轉讓給新配偶。如果這是第二次婚姻，而夫婦各人都有跟前配偶所生的子女，那麼這個問題就更加複雜了。假設夫婦各自執行TOD契約，指定了他們自己的子女為受益人。如果其中一方先去世，在生配偶將擁有整個房子。在生配偶可以把房產送給自己的子女，並完全把已故配偶的子女排除。