When planning for the future, ensuring your assets transfer smoothly to your loved ones is a top priority. In various states, Three common tools for avoiding probate are Transfer on Death (TOD) Deeds, adding a Joint Tenant and Living Trusts. While each option serves to bypass the probate process, they differ significantly in flexibility, legal protections, and potential complications. Understanding these differences is crucial in determining which option best suits your estate planning needs. Below is an overview of the options, however, we strongly suggest speaking with an Estate Planning Attorney and/or an Accountant for further details.



A Transfer on Death Deed allows a property owner to designate a beneficiary who will inherit the property upon the owner’s passing. The deed remains revocable during the owner’s lifetime, meaning it can be changed or revoked at any time before death.

Advantages of a TOD Deed:
- Avoids Probate: The property transfers directly to the named beneficiary without going through probate.
- Simple & Cost-Effective: Unlike a trust, a TOD Deed does not require extensive legal documentation or expensive setup fees.
- Retains Ownership Control: The owner retains full control of the property while alive, with the ability to sell, refinance, or change beneficiaries.

Disadvantages of a TOD Deed:
- Limited Asset Coverage: Unlike a trust, which can include multiple assets, a TOD Deed only applies to real estate. It can only be used to transfer one to four residential dwelling units or condominium units, or a single-family residence with less than 40 acres of agricultural land.
- Potential Legal Challenges: Disinherited heirs can contest the deed, leading to potential court disputes. Upon owners passing you must send a 
to all legal heirs. You must include a copy of the recorded Transfer on Death Deed and of the death certificate
- Creditor Claims & Liens: Beneficiaries may be responsible for any outstanding debts tied to the property.
- Could disqualify Medicaid eligibility.
- Each person on title needs their OWN Transfer on Death Deed.



A Living Trust is a legal entity that holds assets on behalf of beneficiaries. The trust creator (grantor) can manage and use the assets during their lifetime and designate successors to manage or inherit them upon their passing.

Advantages of a Living Trust:
- Comprehensive Estate Planning: A trust can include real estate, bank accounts, investments, and other valuable assets.
- Avoids Probate & Court Oversight: Like a TOD Deed, assets in a trust bypass probate, but with fewer legal challenges.
- Privacy Protection: Unlike wills and TOD Deeds, which become public record, trusts maintain confidentiality.
- Protection for Incapacity: If the grantor becomes incapacitated, a successor trustee can manage the assets without court intervention.
- Minimizes Legal Risks: Trusts reduce the chances of disputes among heirs and allow for greater control over asset distribution.

Disadvantages of a Living Trust:
- Higher Upfront Costs: Setting up a trust requires legal assistance and higher initial costs compared to a TOD Deed.
- Ongoing Management: A trust must be actively managed and updated as circumstances change.
- Requires Proper Funding: Assets must be correctly transferred into the trust to be effective.



Another common way to transfer property outside of probate is Joint Tenancy. When two or more people hold property as joint tenants with Right of Survivorship (or Community Property with Right of Survivorship), ownership automatically passes to the surviving joint tenant(s) when one owner passes away.

Advantages of Joint Tenancy:
-Immediate Transfer of Ownership: No probate process is required.
-Simple to Set Up: Adding a co-owner is straightforward and inexpensive.
-Maintains Full Ownership During Lifetime: Each owner retains full property rights while alive.

Disadvantages of Joint Tenancy:
-Loss of Control: Once a joint owner is added, they must agree to any sale, refinancing, or changes.
-Potential Legal and Financial Risks: Creditors of the joint tenant can place claims against the property.
-No Flexibility in Distribution: Ownership automatically transfers to the surviving joint tenant, which may not align with the original owner's estate planning goals.
-Capital Gains Tax Considerations: Unlike a trust, joint tenancy does not benefit from a full step-up in basis upon death, which can result in higher capital gains taxes for the surviving owner.
- Could cause a reassessment on the property and Transfer Taxes/Gift Taxes. *We suggest speaking with a CPA and the county assessor  about these implications.















Which Option is Right for You?
If you own only real estate and want a low-cost way to avoid probate, a TOD Deed may be sufficient. If you want full control over how assets are distributed and wish to include multiple types of assets, a Living Trust is the better choice. If you want to ensure an immediate transfer to a co-owner, Joint Tenancy may be an option, but it comes with its own risks. Additionally, California law imposes specific requirements for Transfer on Death Deeds. For instance, beneficiaries must notify any legal heirs of the transfer, and the deed must be properly recorded. Failure to meet these requirements can create legal complications.
If you’re unsure which estate planning tool best suits your situation, consulting with an estate planning professional can help ensure your assets are protected and smoothly transferred to your loved ones.

Disclaimer: It is the client's sole responsibility to look into Transfer on Death Deeds (also called Beneficiary Deeds), Trusts, and Joint Tenancy Deeds. Colorado Real Estate Documents and Notary Services, LLC is not to be relied upon as any sort of advisor for these types of deeds. This material is intended for general information only and is not to be taken as legal advice. We strongly suggest speaking with an Estate Planner and an Accountant about the implications of any of these options.

Nolo: Transfer on Death Deeds vs. Living Trusts

Chatterton Inc.: Choosing Between a TOD Deed or Living Trust

Geiger Law Office: Issues with TOD Deeds in California

Sacramento County Public Law Library: TOD Deeds in California

Vara Law: Joint Ownership vs. Trusts

Keystone Law: Joint Tenancy vs. Other Ownership Structures

Aldav Law: Trust Uses and Abuses

*Notice of Revocable Transfer on Death Deed*