A new method of probate avoidance for homeowners in California
As of Jan. 1, 2016, homeowners in California will be able to bequeath property to their heirs without having it go through probate, which can be an expensive and prolonged process. The new method is called a revocable transfer on death deed, which resembles payable on death accounts provided by banks and other financial organizations. These accounts are sometimes referred to as “poor man’s trusts” because they avert the necessity of establishing costly trusts to prevent assets from going through probate.
Over half of the states currently offer this option for real estate. And due to new legislation in Sept. 2015, California will soon be joining them. Governor Brown signed AB139, which creates the revocable transfer on death deed that would transfer real property upon the owner’s death without going through probate. There were at least five prior unsuccessful attempts to pass a similar law.
Single individuals, including widows and widowers, will benefit the most from the new legislation. Married people in California are currently able to avoid probate by retaining title to their home or other assets as community property with right of survivorship or joint tenants with right of survivorship. In this way, the surviving spouse can take possession of the home without a probate proceeding.
However, prior to the passage of the bill, the only option available to single people for avoiding probate of their home without adding someone to the title while they were still living, was to establish a trust. The only alternative to avoiding probate is to establish a trust.
Homeowners who wish to take advantage of the new legislation will sign a document called a Simple Revocable Transfer on Death Deed, designating the beneficiary of the property. They are required to have the instrument notarized and recorded with their county within 60 days. In the event that they change their mind, the deed is revocable.