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The Basics of Beneficiary Deed Law

4 min read

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By Thomas Rosen

Beneficiary deeds transfer property at the time of the owner’s death. Learn the basics of beneficiary deed law to see if this legal solution suits your needs.

In the United States, millions of dollars of real estate changes hands daily. In 2019 alone, more than 5.3 billion existing homes were sold across the country. To be legally binding, every one of these transactions requires a signed legal document known as a deed, which confirms or transfers ownership rights to a property.

Sometimes, transfer of property ownership occurs immediately upon the death of the current property owner. That’s where beneficiary deed law comes into play.

Beneficiary Deeds Defined

A beneficiary deed — sometimes referred to as a transfer-on-death deed — is a legal estate planning document that’s used to transfer real property at the time of the owner’s death. Once this deed is set up, ownership transfers automatically to the designated person or entity when the current owner dies and a legal death certificate is presented.

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Advantages of Beneficiary Deeds

The main benefit of a beneficiary deed is that it lets the parties bypass the probate process, during which the will of a deceased individual is reviewed to determine its validity and authenticity. This process, which can be affected by inheritance disputes and issues involving complicated assets, may range from a few months to a few years, holding up the transfer of property.

Because a preexisting beneficiary deed transfers the ownership of property at the time of death, that property doesn’t become part of the decedent’s estate. Therefore, it isn’t affected by the time-consuming probate process.

For individuals who plan on bequeathing property to a person or entity upon death, there are several other compelling reasons to consider a beneficiary deed.

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Disadvantages of Beneficiary Deeds

Beneficiary deeds may simplify the transfer of property from grantor to beneficiary, but there are several disadvantages to this legal document.

DIY Beneficiary Deed Law

Because beneficiary deeds are simple to set up, many individuals forgo a lawyer and create the document independently using a printable beneficiary deed, such as this one provided by Washington DC’s Office of Tax and Revenue.

Because beneficiary deeds are state-specific, forms may differ depending on where the property is located. RocketLawyer’s Document Creation website provides an easy way to create a beneficiary deed for your state.

If you choose to create your own document, it should include, at minimum, the following information:

The document should be properly formatted according to individual state requirements and should be signed and dated before a notary. A beneficiary deed is activated by filing it with the county recorder of deeds where the property is located. Before recording a deed, always check state laws to make sure your document is valid and enforceable.

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Other Considerations Affecting Beneficiary Deed Law

Although the laws governing beneficiary deeds are fairly straightforward, there are several factors that should be considered prior to choosing this legal path.

Whether you choose a beneficiary deed or opt for an alternative solution, it’s important to know the state laws governing these legally binding property transfer documents.

Note: An estate planning attorney or real estate lawyer can help property owners select and execute the most suitable legal option for their unique situation.

 

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Thomas Rosen

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