THE DEFEAT OF AB250

On June 24, 2008 the Senate Judiciary Committee met to determine the fate of AB250 Revocable Transfer on Death Deed.

I emphasized the fact that now low-income, and middle-class Homeowners cannot afford to pay lawyers for the fees lawyers charge for Trusts. I quoted the article of Jeff Bleich, the President of the mandatory State Bar of California (216,373 members). This article, titled "The Neglected Middle Class," was published in the June 2008 California Bar Journal, which is received by all 216,373 members of The State Bar of California. The leading sentence is "Of the many challenges that we face as a profession, the one that should concern us most is that we now have a legal system in which the majority of Americans cannot afford adequate legal service." This lengthy article points out that the very rich can afford to pay for legal services, and the very poor receive legal services from legal aid offices. However, it states "In California today, there is only one legal aid lawyer for every 8,000 low-income persons needing legal service."

I talked about the fact that low-income and middle-class Homeowners now buy do-it-yourself Quit Claim Deeds or Joint Tenancy Deeds, which they prepare and record, in an effort to avoid lawyers, and avoid the Probate of the Home after death.

However, once the Quit Claim deed is recorded, the Homeowner no longer owns the Home, and the Loved One who now owns the Home often decides to sell, leaving the elderly Homeowner homeless.

Sometimes the Homeowner uses a Joint Tenancy Deed, adding names of Loved Ones,believing this takes effect only after death of the Homeowner. But the Home often ends up part of a Loved One's divorce, or of a Loved One's bankruptcy, or liened by a creditor of a Loved One, who demands payment, threatening sale of the home if not paid.

Also, Homeowners go to a Trust Mill, that promises a cheap Trust, but delivers financial disaster. Occasionally, the California Attorney General shuts down a Trust Mill, but then another Trust Mill pops up to take advantage of Homeowners who cannot afford to pay the large fees that legitimate lawyers charge for a Trust.

I said that this Revocable Transfer on Death Deed will allow Homeowners to avoid the expenses of a Trust, and the Home will not need Probate, because upon the death of the Homeowner, the named Beneficiary automatically owns the home, paying NO Capital Gains taxes upon sale. This will protect Homeowners from QuitClaim Deeds and Joint Tenancy Deeds, and Trust Mills.

This Deed will be another Estate Planning document that legitimate Trust/Probate lawyers could use, while charging the client a very small fee.

All of the members of the Senate Judiciary Committee are lawyers, so I am certain they understand what I am saying.

Brian Hebert, Executive Secretary of the California Law Revision Commission, discussed the many amendments made since July 10, 2007, which improved AB250.

One amendment produced two Deeds. The "Simple Revocable Transfer on Death(TOD) Deed" allows a single Homeowner to transfer at death to a named Beneficiary, avoiding Probate. The "Revocable Transfer on Death (TOD) Deed with Life Estate" allows a couple (married, living together, partners, sisters,brothers, etc.) to assure that the second to die will own the home until the second to die, does die, when it will be transferred to the named Beneficiary, avoiding Probate.

Other amendments include (1) The bill will have a five year sunset date. (2) A revocable TOD deed must now be recorded within 60 days after it is executed.(3) The procedure for revocation has been simplified, so that the user is not required to identify the deed being revoked. All prior deeds would be revoked by a recorded revocation form. (4) The time to invalidate a fraudulent transfer was extended from 90 days to 120 days. (5) Extensive user advisory language was added to the back of the statutory form. (6) The statutory form was made mandatory. (7) Added protection for Medi-Cal estate recovery action, because this Deed is not a creditor avoidance device.

The work of the California Law Revision Commission is excellent. For over 50 years, almost every piece of Legislation recommended to the California Legislature has become law.

Assemblyman Chuck Devore asked the Senate Judiciary Committee to approve AB250, pointing out that our Homeowners need this new Deed.

David Wolfe, representing the Howard Jarvis Taxpayers Association spoke in support of AB250, as did Boyce Hinman representing the Lambda Letters Project.

However, the representatives of the Trusts and Estates Section of The State Bar of California spoke in opposition to AB250, basically arguing that only lawyers should be allowed to do Estate Planning, and that Homeowners can afford to pay these lawyers the fees they charge.

The business friends of the Trust/Probate lawyers, supported the opposition of the Trust/Probate lawyers.

All of the opposition ignored the fact that ten other states have this Deed, where it works well: Missouri (first in 1989), Kansas, Ohio, New Mexico, Arizona, Nevada,Colorado, Arkansas, Wisconsin and Montana.

When the vote was taken, my Senator, Dick Ackerman, a co-author of AB250,

voted YES. Ellen Corbett, Tom Harman, and Sheila James Kuehl voted NO. Darrell Steinberg abstained.

The L.A. Times told me that lawyers contribute more money to politicians than any other group. It appears that the Trust/Probate lawyers own the Senate Judiciary Committee. Sad.

However, I will not give up. I am a member of AARP, and the California Alliance for Retired Members, and the California Congress of Seniors. I hope these three groups will help me in my future efforts to allow California Homeowners to use a Revocable Transfer on Death Deed, created by the California Legislature.

Take a look at the two deeds proposed by AB250 Revocable Transfer on Death Deed:

"Simple Revocable Transfer on Death (TOD) Deed" and

"Common Questions About the Use of This Form".

"Revocable Transfer on Death (TOD) Deed with Life Estate" and "Common Questions About the Use of This Form".

Someday, Californians will be able to use these Deeds, but not yet.