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Peter Robert Stone

PETER ROBERT STONE


AB 139: Transfer on Death Deeds (TOD deed)

This bill, which was approved by the Governor on September 21, 2015, creates the revocable transfer on death deed. This deed transfers real property on the death of its owner without a probate proceeding under specified rules. The bill requires that an individual have the capacity to contract in order to make or revoke the deed and requires the deed to be in a statutory form provided for that purpose. In order for the deed to be effective, it must meet the standard requirements for most deeds in that it must be signed, dated, acknowledged, and recorded. The deed does not have to be delivered to the beneficiary of the deed. The deed does not affect the owner’s ownership rights, but it is part of the owner’s estate for the purpose of Medi-Cal eligibility and reimbursement. Such a deed is void under the bill if the property is titled in joint tenants or as community property with right of survivorship. The TOD deed can only be used to transfer a parcel of property that contains one to four residential dwelling units, a condominium unit, or a parcel of agricultural land of 40 acres or less that contains a single-family residence. The bill has a sunset date of January 1, 2021.

The bill was proposed as a low cost alternative for those seniors who cannot afford attorneys to create trusts or other estate planning documents for them. It was also proposed to help relieve an overburdened California court system. Creator of the legislation, Assemblyman Mike Gatto’s (D-Glendale), has said, “Just like a person can designate a bank account to go to a loved one upon death, by allowing individuals to transfer property cleanly through a TOD Deed, we can avoid the expensive probate process and give families greater peace of mind.” The Assemblyman has also pointed out that over twenty other states have already adopted this option. The bill has been supported by California Communities United Institute and the Conference of California Bar Associations, who believe that the TOD deed provides seniors with a simple, no cost method to transfer property to their heirs.

However, many other groups have opposed the bill. The California Advocates for Nursing Home Reform (CANHR) strongly opposed this bill as they believe it makes many elders even more susceptible to undue influence and elder abuse. As noted above, TOD deeds are subject to estate recovery. Patricia L. McGinnis, the Executive Director of CANHR, has stated that CANHR believes that those low-income elders who are likely to execute TOD deeds are also more likely to be on Medi-Cal and therefore their estates are subject to recovery. The bill was also opposed by the California Land Title Association and the California Escrow Association, who argue that the bill “creates risks that put California’s most vulnerable group – senior citizens – at great risk for real property fraud.” They also argue that TOD deeds are complex and when used without legal advice, they could create confusion and ambiguity that could cloud the properties title.