A transfer on death deed in California lets you name a beneficiary who will inherit your home when you die, without the property passing through probate. The deed takes effect only at your death, you can revoke it any time while you’re alive, and it works only for specific kinds of residential property. To be valid, it must be signed in front of two witnesses, notarized, and recorded with the county within 60 days. The statute authorizing these deeds is currently set to expire on January 1, 2032.
What Property You Can Use It For
A TODD only works for residential property, and the categories are narrow. California law limits it to parcels improved with one to four residential dwelling units and to individual condominium units in a common interest development. Agricultural land is eligible only if the parcel is 40 acres or smaller.1California Legislative Information. California Probate Code 5610 Commercial buildings and vacant land do not qualify. Whether a property qualifies is judged by its circumstances at the time you sign the deed, not at the time of your death.
How to Create a Transfer on Death Deed
Any owner with the legal capacity to enter a contract can execute a TODD.2California Legislative Information. California Probate Code 5620 The deed itself must follow the statutory form in Probate Code Section 5642, or be substantially similar.3California Legislative Information. California Probate Code 5642 The form asks you to fill in the legal description of the property, the assessor’s parcel number, and the names of your beneficiaries.
Naming Beneficiaries
Each beneficiary has to be identified by name.4California Legislative Information. California Probate Code 5622 A general description like “my children” will not do the job. You can name individuals, a trust (listing the trust name, trustee, and date), or a private or public entity.3California Legislative Information. California Probate Code 5642 A vague beneficiary description can send the people you wanted to help into court to ask a judge what you meant, which is the opposite of what the deed is for.
Signing, Witnesses, and the Notary
This step is where most TODDs go wrong. The deed needs three layers of authentication, not just a notary stamp. You sign it, two witnesses who are both present at the same time sign it, and your signature is then acknowledged before a notary public.3California Legislative Information. California Probate Code 5642 The witnesses’ signatures do not need to be notarized. Yours does. Skipping the witnesses is probably the most common mistake with these deeds, and it voids the whole thing.
Recording Within 60 Days
Once the deed is notarized, you have 60 days to record it with your county recorder’s office. Miss that window and the deed has no effect.5California Legislative Information. California Probate Code 5626 You do not have to deliver the deed to your beneficiary or get their agreement while you are alive.
If You Co-Own the Home
A TODD transfers only the share of the owner who signs it. If you own the home with a spouse or anyone else, your deed does not affect their interest. Each co-owner who wants to name a beneficiary has to execute and record a separate TODD.3California Legislative Information. California Probate Code 5642
How to Revoke or Change It
You can undo a TODD at any point during your lifetime, in any of three ways. You can complete the statutory revocation form, have it witnessed and notarized, and record it. You can record a new TODD, which automatically revokes any earlier one.3California Legislative Information. California Probate Code 5642 Or you can sell the property, transfer it, or move it into a trust before you die.
Two situations surprise people. First, a will cannot revoke a TODD. If you name your daughter on a recorded TODD and later write a will leaving the house to your son, the TODD controls and your daughter gets the house. Second, divorce does not automatically revoke a TODD that names your former spouse. If you divorce and never record a revocation or a replacement deed, your ex still inherits the property at your death.
What the Beneficiary Actually Receives
Debts Follow the Property
A TODD does not shield the home from your creditors. If a probate proceeding is opened for your estate, the personal representative can require the beneficiary to return the property, or its fair market value, to pay outstanding debts.6California Legislative Information. California Probate Code 5676 The beneficiary’s liability includes any net income from the property and, if they already sold it, interest on the value from the sale date. The deed lets the property skip probate; it does not let your unpaid creditors go empty-handed.
The Mortgage Stays With the House
If there is a mortgage on the property, it does not disappear at death. The beneficiary inherits both the home and the loan balance attached to it, though they do not automatically become personally liable for the debt. Their practical options are to keep making the monthly payments, refinance, or sell and pay off the balance from the proceeds.
Federal law protects a family member who inherits in this situation. Under the Garn-St. Germain Act, a lender cannot trigger a due-on-sale clause when property passes to a relative because of the borrower’s death.7Office of the Law Revision Counsel. 12 USC 1701j-3 – Preemption of Due-on-Sale Prohibitions A relative can continue the existing payments without being forced to refinance.
Property Tax Under Proposition 19
This is the piece that costs families the most money when they do not plan for it. When California real property changes hands, the county reassesses it at current market value, which can push the annual tax bill up sharply. A home bought in 1990 might carry a tax basis of $200,000 but a market value of $1.2 million, and reassessment moves the tax to the current figure.
Proposition 19 took effect on February 16, 2021. It allows a parent-to-child transfer of a family home without full reassessment, but only if the child moves in and uses the home as a primary residence within one year of the transfer and files for the homeowner’s exemption or disabled veteran’s exemption within that same year. Grandparent-to-grandchild transfers get the same treatment, but only when the grandchild’s parents (the grandparents’ own children) are deceased.8California State Board of Equalization. Proposition 19 Fact Sheet
Even when the exclusion applies, it has a value cap. The new taxable value is the existing taxable value plus an adjusted amount that, for transfers between February 16, 2025, and February 15, 2027, is $1,044,586.8California State Board of Equalization. Proposition 19 Fact Sheet If current market value exceeds that combined figure, the difference is added to the taxable value. A beneficiary who does not plan to live in the home as a primary residence receives no exclusion at all, and the property is fully reassessed.
Stepped-Up Basis for Capital Gains
Property passed through a TODD qualifies for a stepped-up cost basis under federal tax law. Instead of inheriting the original owner’s purchase price, the beneficiary’s basis becomes the fair market value on the date of death.9Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent If a parent bought a home for $150,000 and it was worth $900,000 at death, the beneficiary’s basis is $900,000. Selling shortly after for roughly that amount leaves little or no capital gains tax to pay.
This is the main reason estate planners often prefer a TODD or similar at-death transfer over gifting property during life. A lifetime gift carries over the donor’s original basis, which can leave the recipient with a large capital gains bill when they eventually sell.
Medi-Cal Estate Recovery
Many California homeowners worry that Medi-Cal will try to recover long-term care costs from their home after death. For property that passes through a TODD, this concern may be unfounded. The California Department of Health Care Services has stated that it will not recover from a deceased member’s property if the property transfers to a new owner through a transfer-on-death mechanism.10California Department of Health Care Services. Medi-Cal Estate Recovery Brochure That is a real advantage over simply holding title in your own name at death, where the recovery program could file a claim during probate. Medi-Cal rules change, so confirm the current policy applies before relying on it.
What It Costs
Creating a TODD is cheap compared to setting up a living trust. California caps notary fees at $15 per signature. County recording fees for the first page of a deed are typically around $20, though some counties assess an added fee under the Building Homes and Jobs Act that can push the total closer to $95. The statutory form itself is free. Most people can complete the process for well under $200.
The deed is also exempt from documentary transfer tax and from the preliminary change of ownership report, so recording it does not trigger reassessment or transfer tax on its own.3California Legislative Information. California Probate Code 5642 The transfer only takes effect at death, so there is no ownership change to tax while you are alive.
The January 2032 Sunset
California’s TODD statute is not permanent. It is scheduled to be repealed on January 1, 2032.11California Legislative Information. California Probate Code 5604 The legislature has extended the sunset once before, so another extension is possible, but not guaranteed. If you record a TODD now and die after the repeal date without a legislative extension, the deed’s validity could be in question. Anyone relying on a TODD as their only plan for real property should watch the deadline and keep a backup strategy, such as a living trust, in reserve.