Californians Have a New Simple Way to Keep Homes Out of Probate
As of January 1, 2016 Californians have a simple, inexpensive way to leave property to their heirs without it going through probate which is expensive and takes a long time. A revocable transfer on death deed is what the new way is called and it is similar to payable on death accounts offered by banks and other financial institutions. The revocable transfer n death deed is found in the California Probate Code Section 5642-5644.
The new option will be most useful for single people, including widows and widowers. Married people in California already have a simple way to avoid probate by holding title to their home or other assets as community property with right of survivorship or joint tenants with right of survivorship. That lets the surviving spouse inherit the deceased spouse’s ownership in the home without it going through probate. Setting up a trust costs around $2,000.00 to $5,000.00 depending on the complexity of the trust which in turn depends on the amount of assets the person or persons have and what person wants to do with the assets.
Living Trusts (also known as Inter Vivos Trusts) are a very good idea for even modest estates because the settlor avoids having the estate enter into probate. Probate fees to the court and to the probate lawyers are set by statute, and probate is expensive. Assemblyman Mike Gatto, D-Glendale, who authored AB139, the state bill which creates the Revocable Transfer On Death Deed, stated that the average cost of probating an estate is $26,000.00.
The living trust is not necessary for everyone. If a single person has an estate consisting of two pieces of real property, a house and a piece of undeveloped land for example, and had a stock portfolio and two bank accounts she could determine who received all of those items using payable on death accounts at the financial institutions, and a revocable transfer on death deed. As the name of the new deed implies it is revocable until the owner dies and revocation is accomplished by recording a similar deed to the original that specifies it is revoked.
In the context of a divorce the new deed might be helpful as a stop gap measure until a more robust estate plan is prepared after the divorce is completed.