When an estate owner has property in California or elsewhere, consideration should be given to what will happen to it when the estate owner dies. A last will and testament typically specifies who will inherit the assets of the estate, often including real estate assets. Some estate owners use what is referred to as a transfer-on-death (TOD) deed to pass ownership of a property to another person as part of an estate plan.
Signing a TOD typically means that ownership of the property in question will transfer to the new owner without going through a probate process. The deed includes the name of the designated owner, to take effect when the estate owner dies. This is an automatic transfer, but the estate owner remains in control of the property while alive.
Estate owner’s rights after signing a TOD
Even after signing a TOD, an estate owner might decide to refinance a mortgage loan on the property. In fact, it’s also possible to rent or even sell the property, as well. However, as soon as the estate owner dies, the TOD automatically takes effect, so the party specified in the TOD instantly becomes the new owner of the property.
A TOD is a revocable document
Some estate planning documents cannot be changed after they are signed, such as an irrevocable trust. A TOD, however, is revocable. This means that, if an estate owner changes his or her mind, the designee’s name can be removed and another added or the document may be deleted from an estate plan altogether. An estate owner must be of sound mind in order to make additions, deletions or amendments to an existing estate plan.