How the California Transfer on Death Deed Can Still Lead to Probate

Estate Planning News Flash – How the California Transfer on Death Deed Can Still Lead to Probate

By Attorney Paul Hanks Ironclad Living Trusts 

The California Revocable Transfer on Death (TOD) Deed was intended as a cheap and easy option to avoid probate yet it can still lead to probate. In another Blog this law firm commented on the limited value of the California Revocable Transfer on Death Deed. 

The California Revocable Transfer on Death (TOD) Deed form promulgated by the legislature  in 2015 has already hit the skids, resulting in substantial legislative changes which only increase the burdens on the estate without rectifying the probate risks. These changes did nothing to improve the value of the Transfer on Death Deed as compared to the extensive benefits of a revocable living trust. 

So how can the existence of the California Revocable Transfer on Death (TOD) Deed still lead to a probate? There are a few reasons discussed below where an estate would be probated despite the existence of the California Revocable Transfer on Death (TOD) Deed. 

The process of obtaining the California Revocable Transfer on Death (TOD) Deed is so easy that it lacks the scrutiny of a law firm which is inherent with every single living trust created. A law firm which is creating a living trust invests substantial personal time with the client to ensure their clarity and understanding of estate planning. If the client is not of lucidity to engage in trust and estate planning, then a living trust cannot be done. A law firm is held to great standards, and this is for the protection for everyone including the client. But with the California TOD deed, there is no one present to ensure the integrity of the process and that the signer of the TOD deed is of clear mind. Many people executing the California TOD deed are of frail mind and not competent to understand the deed. The witnesses to the execution of the TOD deed and the notary are not qualified to comment on legal capacity to execute such a legal instrument. For these reasons the execution of the California TOD deed by a person of very aged mind is subject to challenge after that person dies. In contrast, with the creation of a trust for a person of frail mind, there are legitimate methods to prove competency at the time of execution. That critical feature which is inherent with the creation of a living trust is totally lacking with the quick execution of the do-it-yourself California TOD deed. 

The California Revocable Transfer on Death (TOD) Deed has actually been shown to be an invitation for fraud. Due to the ease of the California Revocable Transfer on Death (TOD) Deed, it is a hotbed of activity for fraudsters and scam artists. Once the fraud is discovered upon the death of the homeowner, litigation is a guarantee. The California Revocable Transfer on Death (TOD) Deed lacks all the security provided by a revocable living trust. See this law firm’s Blog with regard to the many risks and drawbacks of the California Revocable Transfer on Death (TOD) Form.

The damage wrought by the California Revocable Transfer on Death (TOD) Form cannot be undone once the homeowner has died. It is upon the homeowner’s death that it becomes even more interesting. Many people are surprised to learn that after the homeowner’s death, multiple notices are required to both the government as well as certain individuals. After the death of the homeowner who had executed a California Revocable Transfer on Death Deed, California Probate Code section 5681 mandates that every single heir be noticed that they have the right to file a challenge to the TOD deed within 120 days of receipt of the notice. This notice must be properly served within strict legal requirements, and then an Affidavit of Notice needs to be recorded with the County Recorder in which the home is located. Sometimes this process even implicates the need to undertake an official heirs search. 

And there’s more. The California TOD deed does not shield the estate from creditors as does a living trust. The California TOD deed is not a shield from many types of liability which a trust safeguards against. A creditor under a California TOD deed is free to pursue the estate. It’s actually much easier for creditors to target the estate when there is only a California TOD deed in place and bring the matter to court.  

Before falling to the temptation of the ease of merely signing a form to protect your estate, one should explore the option of obtaining quality estate planning services and learn about the many powerful benefits of a California living trust. A trust eliminates all the risk, limitations and drawbacks of the California TOD deed form. Estate planning should be respected, and the disputed California Transfer on Death Deed form impairs the integrity of estate planning. If you are serious about estate protection, reach out to a trust and estates law firm to discuss all your options.