RTOD Deeds – Revocable Transfer on Death Deeds
Starting on January 1, 2016, California introduced a law allowing Revocable Transfer on Death (TOD) Deeds. These legal tools let a property owner give their real estate to a chosen person (beneficiary) when they pass away, without the need for probate court. This assumes that everything is done correctly and there are no significant changes in family circumstances, such as the beneficiary (for example, a child) passing away before you, the property owner.
Benefits of RTODDs
- Avoid Probate: If arranged properly and without major unforeseen changes in the family, these deeds bypass the lengthy and costly probate court process.
- Cost-effective Alternative: They offer a simpler, less expensive option compared to setting up a living trust or other methods traditionally used to avoid probate.
- Flexibility to Change Mind: The property owner can cancel (revoke) the deed at any time while they are alive, offering flexibility if circumstances or decisions change.
- Tax Benefits: These deeds provide the same tax benefits as if the property was transferred through a trust or inherited under a will.
Drawbacks of RTODDs compared to Revocable Living Trusts
Background on the Law
Originally set to end on January 1, 2021, the law for Transfer on Death (TOD) Deeds was extended for an additional year as part of a response to the COVID-19 pandemic. Governor Newsom signed Senate Bill 315 (Roth) on September 22, 2021, which prolongs the effectiveness of the TOD Deed law until January 1, 2032, according to California Probate Code sections 5600 – 5698. This extension includes many suggestions from the California Law Revision Commission’s study on Revocable Transfer on Death Deed (RTODD).
Where to get advice
Whether an RTODD or a Revocable Living Trust are a better choice for probate avoidance depends on your personal circumstances. Wealth Care Lawyer – Klaus Gottlieb, Esq., with offices in San Luis Obispo, CA, and Cayucos, CA, welcomes your inquiries. Contact us here.
