The Current State of Revocable Transfer on Death Deeds in California
Since 2016, California has allowed property owners to sign revocable transfer on death deeds (RTODDs). These deeds authorize the automatic transfer of property title to designated beneficiaries upon the property owner’s death. This means the property transfers without going through probate or being held in trust, which many people were happy to take advantage of.
There are some particularities with these deeds, and anyone drafting one should understand them. First, only three types of property qualify:
- Residential property with one to four units
- Single tract of agricultural land with a single-family residence (up to 40 acres)
Further, if there is more than one beneficiary, each one must receive an equal share.
Issues With Current RTODD Laws
There were problems with California’s RTODD laws as they stood, however. For example, if the transferor unknowingly designated 1/3 of the property to one person and 2/3 to another, the deed would be invalidated. If the legal description of the property was inaccurate (which is common), it could also invalidate the deed. Often, such errors are not realized until after the transformer passes away, and then there is little the beneficiaries can do if the court invalidates the RTODD.
Additionally, these deeds were extremely easy to execute. Anyone could get the form and fill it out, and beneficiaries could present it to the court. This opened the door wide for potential undue influence or fraud, as someone could easily falsify an RTODD, depriving the property owner’s heirs of their rightful property ownership.
Updates to RTODD Laws with SB 315
In 2021, the California legislature passed Senate Bill 315, which aimed to solve some of the problems with the initial RTODD statute. These updates will take effect on January 1, 2022.
First, SB 315 addresses how simple errors can render the entire transfer invalid. Moving forward in 2022, if there is an ambiguity or error on an RTODD, the new law allows the court to try to determine what the transferor’s intent was and apply the law to that intent. This helps to keep certain RTODDs valid despite small errors in legal descriptions or beneficiary specifications.
The updated law also sets out a more complex process of executing a deed to try to protect transferors from fraud or undue influence. Moving forward, to be valid, an RTODD will need to be witnessed by someone other than the beneficiary. If the beneficiary is the witness, and the RTODD is later challenged by heirs, it will be presumed to be fraudulent.
Overall, these improvements are a good start, but they do not resolve all potential issues with RTODDs. There is still a risk that people can falsify witness and notary signatures if they are determined to commit fraud. In addition, some courts might decide they cannot determine the transferor’s intent if an error was made, so the deed might still be invalidated.
Seek Help from a Santa Ana Estate Planning Lawyer
The best thing to do is consult with a Santa Ana estate planning attorney who can advise you on whether an RTODD is the right choice for you. Contact the Law Offices of Roshni T. Desai for more information today.