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Peterson and Sams: New state law makes sense

Matt Peterson and Eric Sams, CFP
Special to The Union

A new California Transfer on Death deed law will go into effect on Jan. 1.

This TOD deed titling allows for the transfer of real property upon the death of the property owner to a predetermined beneficiary.

California will join the ranks of 27 other states who currently allow this type of deed titling.



Prior to the new deed law, California real property was typically transferred by gift, will, trust or joint tenancy. Each of these methods have their own benefits and drawbacks:

Gifted property occurs when you are still alive and is easy to implement. When you transfer via gifting you no longer own the property.




Wills generally require probate after you die. Probate can be time consuming and expensive.

Trust documents are expensive, but work well. Trusts can accommodate more complex estate planning issues.

Joint Tenancy with Rights of Survivorship titling is also easy to implement and is a good choice for married couples. However, if you intend to use this titling to transfer to a child, there are potential issues to consider.

When a parent retitles a child as Joint Tenant with Rights of Survivorship, they have just made a completed gift to their child. The property is now a recorded asset of both the parent and the child and is now exposed to creditors of the child. This could lead to unintended consequences if the child is sued, on public assistance, or goes into bankruptcy. Additionally, the parent would have the get the child’s permission to sell, mortgage, or change title to the property.

A better solution would be for the parent to setup a TOD to the child. Here are some of the benefits associated with the NEW TOD deed law:

• The property passes to beneficiary by order of law after death.

• The property is NOT subject to the outside creditors or legal actions against the beneficiary.

• The beneficiary does NOT need to sign, acknowledge or even be told about the deed election.

• You can change or revoke your beneficiary at any time while you are alive.

• Prior to death, you can sell, retitle, mortgage, or give your property away without the permission of the beneficiary.

• The property receives and step-up in basis upon death and transfer to the beneficiary.

The process of retitling property is simple. After consulting your estate planning attorney, go to a title company and complete the required paperwork. According to Tracy Willis at Placer Title, you can modify your grant deed yourself for as little as $50 or you can pay a paralegal to process the grant deed for around $200.

As Certified Financial Planner Practitioners, we welcome this new law.

For years, we’ve recommended adding POD or TOD beneficiaries to bank and financial accounts.

For the same reasons, it may also make sense to title your real estate property the same way.

Eric Sams of Sams investment Strategies, An Independent Firm, 530-272-5100, located at 1793 East Main St., Grass Valley CA. Raymond James is not affiliated with Matt Peterson and Summit Consulting. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. You should discuss tax or legal matters with the appropriate professional. Hear Matt Peterson and Eric Sams on KNCO radio every Monday.


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