The California Legislature has enacted a new law allowing for the transfer of real property without involvement of the Probate Court. New Probate Code Sections 5600 – 5694 establish a revocable transfer on death deed and are in effect as of January 1, 2016 on a trial basis for five years. Property owners can record a deed transferring their interest in the property to a named beneficiary upon the death of the owner. The property is not considered part of the decedent’s estate and transfers by operation of law to the named beneficiary. In addition, the deed transferring ownership is revocable.
Probate avoidance has become the primary goal of most individuals and families when doing estate planning. When someone dies without any form of estate plan, it is likely that a transfer of the decedent’s estate to beneficiaries will require a petition filed with the Probate Court. Due to significant cutbacks in the court system and a growing number of cases, Probate cases are taking up to two years to be resolved. In addition, statutory fee applicable to such cases can make them very expensive.
The creation of an individual or family trust is an effective method of Probate avoidance. Assets are transferred into the trust and pass to beneficiaries without the need for the Probate Court. Other methods of transferring assets without a trust are also available. For example, a decedent’s personal property up to $150,000 and real property up to $50,000 may be collected by affidavit. Using multiple forms of Probate avoidance can save time and money.
The revocable transfer on death deed brings another effective tool to avoid Probate. It does not, however, create any ownership rights for the beneficiary until the transferor’s death. Proper recording of the notarized deed is required within 6o days of signing. The use of this deed should be considered carefully as a part of one’s estate plan especially as it relates to joint tenancies and community property interests.
In addition to existing estate planning methods, the new revocable transfer of death deed helps streamline real property transfers.
