How a Beneficiary Deed Works

Assets can be placed directly into a living trust to avoid probate, but also in some situations you may choose to instead transfer the property by beneficiary deed.

A beneficiary deed lists who the owner wants to inherit the property after his/her death. The new deed must be signed and recorded with the office of the Recorder of Deeds in the county where the real estate is located. Recording it will not incur any liability or tax concerns because there won’t be an immediate transfer of ownership. There will, however, be a recording fee.

You continue to own the property during your and your spouse’s lifetimes, so you retain the right to mortgage it or sell it.

If you desire a change in beneficiary, a new beneficiary deed would be created, signed, and recorded naming the new beneficiary. This action would supersede all previously recorded beneficiary deeds. However, you may choose to file a statement of revocation of the first beneficiary deed with the county Recorder of Deeds office to eliminate any confusion.

Because you are not technically giving the property away during your lifetime, the deed will not be considered a gift. The property will contribute to the value of your estate for estate tax purposes (which would only be relevant to high-net worth individuals).

We advise a thorough discussion at Law Office of Sativa Boatman-Sloan, LLC with our qualified estate planning attorneys to see if a beneficiary deed is the right path for you.

View / Print a copy of this article in Volume 6, Issue 3 of the Law Office of Sativa Boatman-Sloan, LLC & 417 Elder Law Newsletter.