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Do You Want Control Over What Happens to Your Hard Earned Assets?

After a lifetime of hard work, most people would like some say in what happens to their assets after their passing.

California is now taking the initiative to relieve some of the extensive legal processes involved with estate planning by introducing the transfer on death (TOD) deed starting on Jan. 1, 2016. The San Francisco Chronicle reports that with this initiative, California will join the more than half of states in the U.S. that already offer this option.

Last Will and TestamentThis revocable beneficiary deed allows for the transfer of an individual’s residence to a beneficiary, as long as it doesn’t exceed more than four dwelling units, such as condos and single family residences, with fewer than 40 acres of land, to be completed upon the individual’s death, without the need for a revocable trust or a probate court.

Generally, if one’s assets amount to six figures or higher, that person should probably have a trust in addition to a will in order to help minimize estate taxes and avoid probate. However, the new TOD deed may prevent the need for some individual’s to draft expensive trusts.

The average trust can cost anywhere from $2,000 to $6,000 with an attorney, and a probate can cost as much as $26,000.

“It is a fairly easy, straightforward and relatively inexpensive way for California residents to transfer their real property, which by and large is people’s most valuable asset,” said Blanca Castro, AARP’s advocacy director in California.

In these cases, the agent remains the sole property owner until their passing and has the power to revoke the deed at any time until then. Fortunately for beneficiaries, this process will have no effect on property taxes.

Overall, a TOD deed is simpler and less expensive than transferring real property through revocable trusts and the probate process.

However, even with the ease of use that a TOD will offer, at the moment a revocable trust is still the preferred method for estate planning in California.

Even though standard asset transfers may benefit more from revocable trusts, some more complex cases may find that a TOD deed is the most logical choice in their particular situation, such as for children beneficiaries born artificially after a parent’s death, according to Holland and Knight.

These children conceived after a parent’s death, referred to as a “PC child,” are usually the result of a parent in dangerous occupations or suffering from fatal diseases, who opt to have their sperm or eggs preserved in case of their death or infertility.

In recent years their have been more than a dozen cases determining whether a PC child is entitled to inheritances left by deceased parents. The results were split about equally.

Unfortunately, with 27 states currently having no relevant laws for these cases, PC children’s right to inheritances are still unclear. The key will be to draft regulation that defines these postmortem conceived descendants.

At least with a TOD deed, PC children may find solace in inheriting property.