Plan Well: New CA Law Allows Home to Be Payable on Death

[fa icon="calendar"] May 10, 2016 / by Joe Petrone

living_trust_estate_planningIn 2015 when we updated our revocable living trust, we verified that our home was titled in the name of our family trust. We placed our home in the trust to avoid expensive probate fees and delayed payment to our beneficiaries.

Starting January 1, 2016 a new law became effective in California that allows us to bypass our trust and simply do a “Transfer on Death Deed” under AB 139.

I will refer you to other sites on how it works and in what states. For now, two questions to answer are, when do I use a “Transfer on Death Deed?” and what might be a landmine?

Transfer on Death Deed

First, a “Transfer on Death Deed” (TOD) will work for most families who do not require a children’s trust. This does not mean that your children have to be under 18 to have a children’s trust. You can have a 23-year-old child who still has not learned how to handle money. A children’s trust will disburse the funds under specific instructions in your trust, so that your child is not ruined spiritually by spending their inheritance recklessly.

Those church families who have only a retirement account and a home may find this TOD attractive. Because your estate is simple, you may not have to take the time and expense to establish a trust or will. You can research this further in these Nolo Press Links on the states which allow a Transfer on Death Deed and how a Transfer on Death Deeds works.

Payable on Death

Second, Transfer on Death is comparable to Payable on Death designation. POD is an optional designation available on a bank account. When my mother passed away, she had the forethought to have her CD assigned to a POD designation. This allowed me with her death certificate and CD account number to go directly to Bank of America. Within 15 minutes I received a check issued for the balance of her CD without probate court intervening.

“Quick and easy” sometimes leads to land mines and is not always prudent. Katherine Pearson wrote in an elder law blog an article titled “Does California’s New ‘Revocable Transfer on Death (TOD) Deed’ Increase Risk of Elder Abuse and Estate Costs?”

Let’s take a brief pause to explain two terms. Revocable means changeable. You can change who your beneficiaries are. One of the questions I get asked by our elders is if their estates are sheltered from creditors in a revocable living trust. The answer is no.

Let’s move on to what Katherine Pearson is saying:

“It is important to note that thousands of California citizens who are 55 years of age or older and who have recently signed up for health care under California’s Medi-Cal expansion program will now have their estates subject to Medi-Cal recovery when they die. If their homes were transferred before their deaths, transferred to an irrevocable trust or if they transferred the property and retained an irrevocable life estate (another cheap, but effective way to transfer property) there will be no estate claim on their home.” 

Her point is that these TODs are subject to recovery by the state of California, because they are revocable. The exceptions are cited such as an irrevocable trust. I mention this because the California Department of Health Services on its web site says that one in three California residents receive health care financed by DHCS.

The other option is for those of us who can afford $279 for a trust or $70 for a will with a simple estate. We can leave a last will and testament for our family, so that values are transferred, not stuff alone.

Where to Start

You can start by taking advantage of the C&MA Partnership with the organization Christian Trustmaker. Just send me an email, and I will set you up. The prices mentioned above are only available by email invite using a C&MA code or you can go the Christian Trustmaker retail site and spend $120 more for a trust or $30 more for a will.

If you are on legal plan with Christian Trustmaker or have had your Christian Trustmaker trust completed but did not have your house titled correctly yet, I encourage you to make this a priority. Customers of Christian Trustmaker can contact Ziebold Law

Many of our church families have been blessed with the incredible savings and a scriptural prayerful approach through Christian Trustmaker – not to mention the complete and responsive legal support that Mark Ziebold has provided me on behalf of many church families.

Topics: Equipping