A California transfer on death deed lets you name someone to inherit your home at your death without going through probate, and you can cancel or change it any time while you’re alive. It’s cheap to set up, but it only works for certain residential properties, the signing rules are strict, and the law is set to expire on January 1, 2032.
What Property You Can Use It For
The deed is limited to residential real estate. Eligible property means a parcel improved with one to four residential dwelling units, or a single condominium unit 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, vacant land, and larger agricultural parcels do not qualify. Whether the property qualifies is judged based on the circumstances when you sign the deed, not at your death.
How to Create One
Any property owner with the legal capacity to enter a contract can create a transfer on death deed.2California Legislative Information. California Probate Code 5620 The deed must follow the statutory form in Probate Code Section 5642, or be substantially similar.3California Legislative Information. California Probate Code 5642 The form itself prompts you for the legal description, assessor’s parcel number, and beneficiary names.
Naming Your Beneficiary
Each beneficiary must be identified by name.4California Legislative Information. California Probate Code 5622 Generic descriptions like “my children” won’t do the job. You can name individuals, trusts (with the trust name, trustee, and date), or private and public entities.3California Legislative Information. California Probate Code 5642 Vague descriptions of the property or the person can send your beneficiary to court to ask a judge what you meant, which defeats the point of avoiding probate.
Signing, Witnesses, and Notary
This is where people go wrong. The deed needs three layers of authentication, not just a notary stamp. You sign, then two witnesses who are both present at the same time sign, and then your signature is acknowledged before a notary public.3California Legislative Information. California Probate Code 5642 The witnesses don’t need to be notarized, but you do. Skipping the witnesses is the most common mistake, and it makes the whole deed invalid.
Recording
Record the deed with your county recorder’s office within 60 days of the notarization date. Miss that window and the deed has no effect. You don’t have to record the “Common Questions” portion of the statutory form; leaving it off doesn’t invalidate anything.5California Legislative Information. California Probate Code 5626 You also don’t need to hand the deed to your beneficiary or get their acceptance during your lifetime.
Co-Owners
A transfer on death deed moves only the signing owner’s share. If you co-own the home with a spouse, sibling, or anyone else, your deed does not touch their interest. Each co-owner who wants to name a beneficiary has to execute and record a separate deed.3California Legislative Information. California Probate Code 5642
How to Revoke or Change It
You can undo the deed at any time during your life, and there are a few ways to do it. Complete the statutory revocation form, have it witnessed and notarized, and record it with the county. Or execute and record a new transfer on death deed, which automatically revokes the earlier one on recording.3California Legislative Information. California Probate Code 5642 Selling the property, gifting it, or moving it into a trust before you die also ends the deed’s effect.
Two traps catch people off guard. A will cannot revoke this deed. Name your daughter on a recorded transfer on death deed, then later write a will leaving the house to your son, and your daughter still gets the house. Divorce does not automatically revoke the deed either. Divorce your spouse without recording a revocation or a replacement deed and your ex still inherits the property when you die.
What Happens After You Die
Creditors Can Still Reach the Property
Property that passes through a transfer on death deed is not shielded from your debts. If someone opens a probate proceeding for your estate, the personal representative can demand that the beneficiary return the property, or its fair market value, to pay outstanding debts.6California Legislative Information. California Probate Code 5676 The beneficiary’s exposure includes any net income received from the property, plus interest on the property’s value from the date of sale if they already sold it. The deed skips probate; it doesn’t leave unpaid creditors empty-handed.
The Mortgage Doesn’t Disappear
If the home has a mortgage, that loan stays attached to the property, and your beneficiary inherits both the house and the balance. The beneficiary doesn’t automatically become personally liable for the debt. Their practical options are to keep making the monthly payments, refinance, or sell and pay off the loan from the proceeds.
Federal law protects family members from being forced into immediate repayment. Under the Garn-St. Germain Act, a lender cannot trigger a due-on-sale clause when property transfers 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 who inherits the home can keep paying on the existing loan.
Property Taxes and Proposition 19
This is where families lose real money when they don’t plan. When property changes hands in California, the county reassesses it at current market value, and the tax bill can jump sharply. A home bought in 1990 might have a tax basis of $200,000 but a current market value of $1.2 million; reassessment raises the annual tax accordingly.
Proposition 19, which took effect on February 16, 2021, allows a parent-to-child transfer of a family home without full reassessment, but only if the child moves in as a primary resident within one year of the transfer. The child must also file for the homeowner’s exemption or disabled veteran’s exemption within one year. Grandparent-to-grandchild transfers get the same treatment, but only when the grandchild’s parents (the grandparents’ children) are deceased.8California State Board of Equalization. Proposition 19 Fact Sheet
Even when the exclusion applies, it’s capped. 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 number, the difference gets added to the taxable value. A beneficiary who won’t live in the home as a primary residence gets no exclusion, and the property is fully reassessed.
Stepped-Up Basis for Capital Gains
Property received through a transfer on death deed qualifies for a stepped-up basis under federal tax law, and this is one of the deed’s biggest advantages. The beneficiary’s tax basis becomes the property’s fair market value on the date of death, not what the original owner paid.9Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent A parent who bought a home for $150,000 and dies when it’s worth $900,000 leaves the beneficiary a $900,000 basis. Selling shortly after for close to that number would mean little or no capital gains tax.
This is the main reason estate planners tend to prefer a transfer at death to a lifetime gift. Gifting property while alive carries over the original owner’s basis, which can leave the recipient with a large capital gains bill when they eventually sell.
Medi-Cal Estate Recovery
Homeowners often worry that Medi-Cal will claim against their home after death to recover long-term care costs. For property passing through a transfer on death deed, that concern may not apply. According to the California Department of Health Care Services, the department will not recover from a deceased member’s property if it transferred to a new owner through a transfer-on-death mechanism.10California Department of Health Care Services. Medi-Cal Estate Recovery Brochure That’s a meaningful advantage over holding property in your name alone, where estate recovery could make a claim during probate. Medi-Cal rules do change, so confirm the current policy applies to your situation before relying on it.
What It Costs
Setting up a transfer on death deed is cheap compared to a living trust. California caps notary fees at $15 per signature. County recording fees for the first page are typically around $20, though some counties add a 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 finish the process for well under $200.
The deed is exempt from documentary transfer tax and from the preliminary change of ownership report, so recording it doesn’t trigger reassessment or transfer taxes while you’re alive.3California Legislative Information. California Probate Code 5642 The transfer only takes effect at death.
The Law Expires January 1, 2032
California’s statute is not permanent. It’s scheduled to be repealed on January 1, 2032.11California Legislative Information. California Probate Code 5604 The legislature has extended the sunset once already, so another extension is possible, but not guaranteed. If you record a deed now and die after the repeal without a legislative fix, its validity could be in question. Anyone using this deed as their only estate plan for real property should watch the deadline and keep a backup, such as a living trust, ready.