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Inherit a home -- not a hassle

Determined activist battles for state approval of a one-page form to bequeath property -- without courts and lawyers.

November 04, 2007|Chip Jacobs | Special to The Times

During the three years she's crusaded to give homeowners a straightforward deed transfer that would avoid Probate Court, Mary Pat Toups has racked up thousands of travel miles, including more than 30 trips to Sacramento. Some lawyers probably wish the tireless seniors' activist would get lost en route.

If the legislation that Toups is pushing for prevails, a standardized, one-page form no longer than a tire-rebate mailer will be available on the Internet or from retail stores for people grappling with one of life's touchier questions: Who inherits their property after they're gone?

The proposed "revocable transfer on death deed," or TOD deed, is aimed at giving homeowners a simple, inexpensive and secure method of handing down property, rather than retaining lawyers to create trusts or guide heirs through the probate system. Elderly people and others with little disposable cash but relatively large accumulated equity in their homes are expected to capitalize most on the option.

Advocates, including the California Federation of Republican Women, several senior-advocacy agencies, and a gay-rights organization concerned about domestic partnership protections, say the idea is long overdue, noting that it's already on the books in 10 other states. Because the transfer wouldn't take place until the owner's death, the chances of someone being duped out of their residence while still living by signing a document they didn't understand would be reduced.

All owners would have to do would be describe the property, list the beneficiaries and indicate whether they wanted a spouse or someone else to live there as an intermediary owner until their death. Owners could rescind and reissue the deed anytime -- provided they retain the mental capacity to grasp their actions -- giving them flexibility to change their minds.

Populist appeal

Despite potent opposition from the California Bar's Trusts and Estates Section, the plan that its proponents tout as "consumer friendly" could be law by next year.

Detractors in the legal community argue that trusting a one-size-fits-all form, without an attorney's advice, is chancy, because every family has different circumstances.

Yet even critics admit it has a populist hook. As long-term real estate appreciation has grown, life spans have increased and so has some people's reluctance to lose a portion of that wealth to attorneys' fees.

No one knows for sure whether the simple form would effectively streamline deed transfers because ownership lines can be so blurry -- and subject to family infighting.

Most deed transfers revolve around bloodlines. Of the roughly 330,000 deeds recorded last year for single-family homes and condominium units in Los Angeles County, for example, an estimated 200,000 involved real estate transfers into family trusts and among kin, according to the county assessor's office.

Toups, 79, a pro bono attorney and a grandmother, says she's lost count of how many clients have told her of their desperation to spare their loved ones the hassle and cost of Probate Court. Typically, the process takes more than six months, with fee rates tied to the estate's value. Under the state probate code, a $1-million house would generate $44,000 in fees for lawyers and administrators.

"How to avoid probate is a very big deal among the senior population," Toups said. "They've heard the horror stories that it takes too long and gets expensive. You add up all the fees, and it's astronomical. The seniors of today are children of the Great Depression. We still value a penny."

If you've never heard of the bill by Assemblyman Chuck Devore (R-Irvine), you're in good company. Devore introduced it on his first day in office in 2004 after meeting Toups at a retirement-village event. The California Bar's Trusts and Estates Section batted it immediately, persuading the Assembly Judiciary Committee to downgrade it into a study bill. That motion effectively muted wider discussion within real estate circles for about two years, even as legal journals went toe-to-toe on the concepts' merits.

The California Law Revision Commission, a 10-member independent state panel that analyzes and recommends legal reforms for state government, endorsed the idea last October, nonetheless. In June, the Assembly unanimously approved AB 250, though it advised adding explanatory language and consumer warnings on the form's back.

"My opponents expected me to just drop the issue and move on, but I didn't," Devore said. "Neither did they expect that Mary would spend her own money to attend every meeting of the Law [Revision] Commission, or that she'd gather hundreds of signatures from seniors. This isn't like some half-baked idea."

The probate process, while it may strike fear in the hearts of some, is how the courts oversee the transfer of someone's estate to designated beneficiaries, while providing parties a forum to contest distributions. Outstanding debts and taxes also are sorted out there. The proceedings are public record.

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