The Serious Disadvantages of California’s Transfer on Death Laws
Effective the first of the year in 2016, California introduced a deed that can automatically transfer property upon a person’s death. While this may seem advantageous as opposed to hiring a lawyer for estate planning purposes, there are several extreme flaws in the law. Here’s what you need to know before preparing a TOD Deed.
Why a Transfer on Death Deed Isn’t Foolproof
There are two major reasons that the Transfer on Death laws don’t provide as much benefit as trusts and other forms of estate planning.
- You Cannot Set the Transfer Conditions – With a trust, you can set the age at which a benefactor inherits the property. You can also have a contingency plan for inheritance should the primary benefactor die before or at the same time as you. When it comes to a deed, there are no additional conditions. The property simply passes to the named person when the deedholder dies.
- The “Restitution Demand” Clause – An estate representative can demand the return of a property within a set period of time from the death of the owner – 3 years. This could leave the Transfer on Death recipient homeless. Or if the property has already been sold, the beneficiary would have to pay back the value of the home, perhaps even more than it was sold for. This gives the executor of the estate true power over the property for the first 3 years.
A Better Way to Avoid Probate when Leaving Property to Heirs
Setting up a trust is a far superior way to leave property to heirs without having to worry about probate. While estate planning with an attorney may cost more than getting a Transfer on Death Deed issued, the benefits far outweigh any inconvenience. To take advantage of affordable estate planning with an experienced attorney, contact Petrov Law Firm today at 619-344-0360.
