Are Transfer on Death Deeds Valid

I recently had a client, Emily, come to me in complete distress. Her mother passed away with a Transfer on Death (TOD) deed recorded for her house, but it was discovered after the fact that the recording date was 65 days ago – a mere five days too late. Emily faced the full expense and delay of probate, a cost she simply hadn’t budgeted for. These situations are heartbreaking, and entirely preventable with proper planning. As an Estate Planning Attorney and CPA with over 35 years of experience here in Moreno Valley, I’ve seen firsthand how powerful, yet easily derailed, these tools can be.

What are the Key Requirements for a Valid Transfer on Death Deed?

A Revocable Transfer on Death Deed is a fantastic way to bypass probate for your primary residence – or other real property. However, it’s not a “set it and forget it” solution. The deed must be properly prepared, signed, notarized, and, crucially, recorded within 60 days of notarization. Failure to meet that deadline means the deed is invalid, and the property will likely have to go through full probate. This is a common oversight, especially if the deed was prepared years ago and the owner becomes incapacitated before finalizing the recording.

What Happens if a TOD Deed Isn’t Properly Recorded?

If the 60-day recording window is missed, the property becomes subject to probate administration just as if no TOD deed existed. This means court filings, creditor claims, potential delays, and attorney fees – easily costing your heirs several thousand dollars, not to mention the emotional toll. It’s important to remember that while a TOD deed avoids probate, it doesn’t eliminate all liability.

What Liabilities Do Beneficiaries Assume with a TOD Deed?

Beneficiaries who receive property through a TOD deed aren’t entirely shielded from the decedent’s creditors. For a period of three years after the death, creditors can still make claims against the property up to its value. This is a critical distinction from assets passing through a properly funded trust, which offer more robust creditor protection. This 3-year window is often overlooked, and beneficiaries need to be aware of potential liabilities before accepting the property.

• Recordation Timing: A Revocable Transfer on Death Deed is a valid alternative to probate for residential property, but it MUST be recorded within 60 days of notarization to be valid.
• Beneficiary Liability: Beneficiaries assume liability for the decedent’s debts up to the value of the property for 3 years after death.
• Not a Substitute for a Trust: While convenient, TOD deeds don’t offer the same level of creditor protection as a well-structured trust.

How Does a CPA’s Perspective Benefit TOD Deed Planning?

As a CPA as well as an attorney, I always emphasize the tax implications. A TOD deed doesn’t change the fact that the property will receive a “step-up” in basis to its fair market value as of the date of death. This means your heirs won’t be subject to capital gains taxes on the appreciation of the property during your lifetime. However, accurately valuing the property at the time of death is crucial for tax reporting purposes, and that’s where my CPA expertise comes in. Proper valuation can minimize estate taxes and ensure compliance with IRS regulations.

What are the Alternatives to a TOD Deed?

While TOD deeds are useful, they aren’t the only option. For larger estates, or those with complex assets, a revocable living trust is generally the superior choice. A trust offers greater flexibility, creditor protection, and can encompass all of your assets, not just real property. Additionally, for primary residences valued up to $750,000, AB 2016 (Probate Code § 13151) allows for a ‘Petition for Succession’ – a faster, court-supervised transfer process, but unlike a TOD deed, it requires a petition and court hearing. For smaller estates, the Affidavit for Real Property of Small Value (Probate Code § 13200) can be used for real property interests valued at less than $69,625, bypassing the need for court involvement entirely.

How do enforcement rules in California probate court shape outcomes for heirs and fiduciaries?

California probate is designed to provide court-supervised transfer of property, yet cases often break down when authority is unclear, required steps are missed, or disputes arise over assets, notice, and fiduciary conduct. When the process is misunderstood, families can face avoidable delay, escalating conflict, and increased exposure to creditor issues, hearings, or litigation before the estate can close.

• Will-Based Power: Secure executor authority letters if a will exists.
• No-Will Power: Obtain letters of administration if there is no will.
• Identify Players: Clarify roles using probate stakeholders.

California probate is most manageable when authority is documented early, assets are classified correctly, and procedure is followed consistently from petition through closing. When the process is approached with realistic expectations about notice, claims, accounting, and dispute risk, the estate is more likely to move toward closure without avoidable conflict or delay.

Verified Authority on California Probate Alternatives

• Personal Property Affidavit ($208,850 Limit): California Probate Code § 13100 (Small Estate Affidavit)
  For deaths on or after April 1, 2025, the gross value threshold for using a Small Estate Affidavit has increased to $208,850. This procedure allows successors to collect cash, stocks, and personal items without court involvement. Warning: This total MUST NOT include assets held in joint tenancy, trust, or those with named beneficiaries (POD/TOD), but MUST include the value of real property unless handled via a separate summary procedure.
• Primary Residence Succession (AB 2016): California Probate Code § 13151 (Petition for Succession)
  You must distinguish between the Affidavit for Real Property of Small Value (strictly for property <$69,625) and AB 2016. Under AB 2016, a primary residence valued up to $750,000 qualifies for a ‘Petition for Succession’ rather than full probate. This is a court-filed Petition requiring a Judge’s Order, though it is significantly faster than full administration.
• Spousal Property Petition (Unlimited): California Probate Code § 13650 (Spousal Transfers)
  This powerful alternative allows for the transfer of unlimited assets to a surviving spouse or domestic partner without full probate administration, regardless of the estate’s value. It is strictly for assets passing to a spouse and requires the property be characterized as community property or quasi-community property.
• Trust Assets & The “Heggstad” Petition: California Probate Code § 850 (Heggstad Petition)
  If a decedent intended an asset to be in their trust (e.g., listed on Schedule A) but failed to retitle it (the “Oops” factor), a Section 850 Petition can obtain a court order confirming the asset as trust property. This “cures” the title defect and avoids opening a full probate estate for that single asset.
• Vacant Land & Timeshares: California Probate Code § 13200 (Real Property of Small Value)
  For real property interests valued at less than $69,625 (the 2025/2026 adjusted limit), successors can file an Affidavit for Real Property of Small Value with the Court Clerk and record a certified copy with the County Recorder. This completely bypasses the need for a hearing or judge’s order.
• Vehicle & Vessel Transfers (DMV): DMV Form REG 5 (Affidavit for Transfer Without Probate)
  Vehicles and vessels may be transferred outside of probate using the Affidavit for Transfer Without Probate (REG 5). Critically, the value of the vehicle is excluded from the $208,850 small estate calculation, meaning a high-value car does not disqualify an estate from using summary procedures.
• Digital Asset Access (RUFADAA): California Probate Code § 870 (RUFADAA)
  Even in summary administration, digital assets can be locked. Without specific RUFADAA language (Probate Code § 870) in your Will or Trust, service providers like Coinbase and Google can legally deny successors access to digital wallets and accounts, forcing a full probate just to retrieve them.