In our last column, we talked about some people's misguided attempts to avoid probate and how those so-called "shortcuts" can cause more problems, and cost more money, than if a family simply followed the probate process. In this column, we want to talk about one shortcut around probate that does work. It is only used to transfer real estate and is called a Beneficiary Deed.
A Beneficiary Deed is a special type of real property deed that is signed and then recorded in the county real estate records by the property owner (he or she is called the grantor in this situation). At the death of the grantor, no matter how many years later, the deed then takes effect and automatically transfers title to another person, referred to as the "beneficiary." That process allows for the legitimate transfer of the property described in the Beneficiary Deed and avoids the cost and delay of probate, if the deed is executed properly. That process works because immediately upon the death of the grantor, the property is transferred to the beneficiary, and the real property is not part of the grantor's estate.
There are additional advantages to a Beneficiary Deed:
A grantor can change her or his mind and revoke the deed altogether;
He or she can then record a second deed with a different beneficiary; and
Because the beneficiary has no interest in the property until the grantor's death, the beneficiary's creditors cannot reach that property.
To be effective, the Beneficiary Deed needs to include the words "transfers on death" or "conveys on death" or similar wording that specifies the transfer is to be effective on the death of the property owner. Also, prior to the death of the grantor, the deed must be signed, notarized and then recorded in the office of the clerk and recorder in the county where the property is located.
A client of ours recently asked the question, "Does a Beneficiary Deed supersede a Will"? The answer is yes, so long as the proper formalities are followed. A Will can only transfer what is owned by the person after their passing. And because the Beneficiary Deed transferred the property to the beneficiary upon the grantor's death, that property is no longer the grantor's property, so the Will has no power over it.
As with all of the other topics we discuss in these columns, we discuss the details of a Beneficiary Deed in our no-cost seminars. The next seminar will be held on Wednesday, Nov. 20, 2019; seating is always limited (no more than eight people), so that we can focus on the specific questions of a small group. If you are interested in attending the seminar, or if you have any questions about this article or topics you would like us to address in future columns, send an e-mail to Kkeim@GJlawyer.com or call (970) 270-1213. Ext.4
Brad Wright's business and estate planning practice includes transactional and litigation matters with a special focus on business succession. His brother, Steve Wright, has a similar law practice in Idaho Falls, Idaho and, together, they assist businesses of all sizes and types with a wide variety of legal issues.
© 2019 Brad R Wright, Steven J Wright