A new form of statutory deed entitled Revocable Transfer on Death Deed (TOD) has been established by the legislature. A TOD deed is a non-probate deed whereby the homeowner may deed his or her home to a name beneficiary and the transfer becomes operative on the homeowner’s death, but will remain revocable until he or she dies.
Why is this of importance to seniors? The TOD was created to allow single seniors or widows to escape probate without the need to draft a trust. Some parents add their children on the deed to the home as joint tenants for the sole purpose of avoiding probate. The problem with doing this is that the children immediately own part of the house, which may subject the house to the children’s creditors.
The beneficiary of a TOD effectuates the transfer when the homeowner dies by recording an affidavit of the transferor’s death certificate and also notifies Medi-Cal of the death.
This new law tries to combat elderly financial abuse by adding a 120 day rule and revocability of the deed. So that if you find out that Mother has transferred her home to her new boyfriend using a TOD deed and Mother is alive, you can simply have mom revoke it. But is mom is dead, you have 120 days to file a lawsuit against the boyfriend and record a lis pendens on the property so that new boyfriend is not able to sell the home.
One catch, If the beneficiary listed on the TOD deed dies before the granter, then the TOD deed is worthless and the property would be probated.
Also, one of the major disadvantages of the TOD deed is that the home will be subject to Medi-Cal recovery. While the legislature intended this new law to help low income seniors who can not afford to pay the legal fees required to draft estate planning documents, it is the low income seniors who are most likely to use Medi-Cal and perhaps lose their homes to a Medi-Cal lien.
As to married people, the best way to avoid probate on a home is to hold title as joint tenants or community property with right of survivor.
So while the TOD deed provides a possible solution for estate planning purposes for low income seniors, it leaves them open to folks who can and will commit fraud and abuse against the elderly. So please use this tool wisely.
The Law Office of Thomas Hogan is an Estate Planning specialist who is prepared to help in your time of need. Feel free to contact us if you are in need of help with Wills, TOD, or Estate Planning in Modesto CA. Call (209) 492-9335 to speak with our Modesto California Attorneys.