BILL ANALYSIS Ó
AB 699
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Date of Hearing: April 13, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 699 (Wagner) - As Amended: March 25, 2011
Policy Committee: JudiciaryVote:9-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill, until January 1, 2017, establishes a new, non-probate
method for conveying real property upon death through a
"revocable transfer upon death deed" (RTDD). Specifically, this
bill:
1)Allows an interest in real property to be transferred on death
by recording a RTDD signed and acknowledged by the record
owner of the property and designating a beneficiary or
beneficiaries. The deed transfers ownership of that property
interest upon the death of the owner.
2)Provides an RTDD form in statute, and provides a statutory
form for revocation of an RTDD. The RTDD form provides
information to the transferor, including explaining how the
RTDD works, how it is effectuated and some of its
consequences.
3)Provides that property subject to RTDD is still part of
transferor's estate for purposes of Medi-Cal eligibility and
will be subject to Medi-Cal reimbursement claims.
4)Requires the California Law Revision Commission (CLRC) to
study the impacts of RTDDs, as set forth above, and report its
findings and recommendations to the Legislature by January
2016.
FISCAL EFFECT
1)Absorbable costs for the CLRC's study and report.
2)Potential minor savings in probate court costs and backlogs.
AB 699
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COMMENTS
1)Background and Purpose . AB 12 (DeVore)/Chapter 422 of 2005,
directed the CLRC to study California's non-probate transfer
provisions and determine whether California should enact a
beneficiary deed--a deed which transfers real property outside
of probate upon death of the transferor. In October 2006, the
CLRC issued its recommendation that California adopt a
revocable transfer on death deed, noting that while the deed
has advantages and disadvantages, creation of such a deed
would, on the whole, be beneficial in California.
According to the author, the RTDD is necessary to "fill a major
gap in estate planning instruments available to ordinary
citizens, by providing a straightforward, inexpensive, and
reliable means of passing real property directly to a
beneficiary, to go along with the many options California
citizens currently have to pass personal property to their
loved ones outside of the long, complicated and expensive
probate process. The bill is particularly intended for the
benefit of senior citizens whose estate consists primarily -
or even exclusively - of the family home, and unmarried
homeowners who wish to leave their home to their partner,
loved one, or family member upon death, but do not want to
transfer a present ownership interest in the property.
Existing law offers these individuals no good options..."
The methods of transferring real property at death include
transfer by will or intestate succession, trust, survivorship
rights created by joint tenancy or community property,
transfer with a reserved life estate, and a revocable transfer
deed as recognized by Tennant v. John Tennant Memorial Home
(1914) 167 Cal. 570. Each method has its advantages and
disadvantages. For example, a will generally requires probate,
which is a time consuming and costly. A trust is expensive to
create, particularly if the sole purpose is to convey one
piece of property. Joint tenancy with right of survivorship
creates immediate property interests in all the joint tenants.
A current transfer, with a reserved life estate for the
transferor, is nonrevocable, preventing the transferor from
later changing his or her mind. A revocable deed under Tennant
v. John Tennant Memorial Home (1914) 167 Cal. 570 has been
used rarely and its legal consequences are not fully
understood.
AB 699
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Thirteen other states, including Colorado, New Mexico, Ohio
and Wisconsin, statutorily recognize a RTDD. The CLRC's
investigation revealed minor differences between states RTDDs
and found that practitioners generally liked having the option
of the RTDD. However, most of the statutes were too new to
provide evidence of their effectiveness or of their
susceptibility to misuse or abuse. For this reason, the bill
requires the CLRC to perform a follow-up study, by January
2016, on the use of RTDDs and any recommendations for changes.
2)Opposition . The California Land Title Association (CTLA) and
the California Escrow Association argue that RTDDs increase
the opportunity for fraud and "will become the new form of
easy, convenient, and cheap elder absuse." The opponents
believe the RTDD is "complex and convoluted" and, when used by
transferors without advice from legal counsel, could well
create confusion and ambiguity that could cloud the property's
title.
3)Prior Legislation . This bill is substantially similar to AB
724 (Devore) of 2009, which failed passage in Senate
Appropriations, and AB 250 (DeVore) of 2007, which failed
passage in the Senate Judiciary.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081