San Francisco, CA (Law Firm Newswire) May 25, 2016 – A new estate planning law that went into effect on January 1 seeks to help California homeowners avoid the costly, time-consuming process of probate when leaving property to heirs.
Bill AB139 was signed into law in September 2015 after previous efforts to pass the legislation failed for almost a decade. It introduces the Revocable Transfer on Death Deed (TOD) which allows individuals to transfer property to a beneficiary upon their passing without the need to set up a revocable living trust or sort out matters in probate court. Such deeds have been permitted in nearly half of the United States already.
“While Transfer on Death Deeds are convenient, it is important to remember they are not a substitute for revocable living trusts, wills or other estate planning concerns,” said nationally known estate planning attorney Michael Gilfix. “Creating a trust has many benefits when it comes to managing and protecting assets, whether it is reducing estate tax liability, signing an Advance Health Care Directive or lifetime incapacity planning.”
Without a trust, the estate is handled through the court system. Probate can take a year or more and cost an average of over $26,000, which can drain an inheritance and create numerous hassles for loved ones. The purpose of a TOD Deed is to help homeowners and beneficiaries with simple estate planning goals save time and money.
TOD Deeds can only be used for residential property of up to four units and can be revoked at any time. Homeowners who want to implement the new option must sign a form, name the property’s heir, and have it notarized. The deeds could be particularly beneficial for single people or elderly residents whose estate consists primarily of their family home.
Opponents of the deeds have raised concerns about the danger of predators forcing senior citizens to transfer their home to them upon death. However, the law includes provisions to deal with potential coercion. In addition, its effects will be evaluated upon expiration on January 1, 2021.
“Transfer on Death deeds are a straightforward, relatively inexpensive tool for individuals seeking an alternative to probate when passing their home to a loved one upon their death,” said Gilfix. “However, people should consider all the options available to them before making a decision on the best way in which to manage their assets.”
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