Areas of Practice:

Elder Law
Estate Planning
Wills and Trusts
Estate Administration
Trust Administration
Guardianships
Conservatorships
Real Estate

Beneficiary Deeds

A beneficiary deed is an estate planning tool that is used to transfer real estate upon your death.  The Colorado legislature passed the law authorizing the use of beneficiary deeds on May 12, 2004 and the law took effect on August 4, 2004. This law was enacted so that people who have a small estate may avoid probate. Probate is a judicial process where the courts approve the transfer of your assets after your death.  It requires filing forms and reporting to the court on an estate’s value and how it will be distributed.   In Colorado, if a person dies and they own a home, their heirs must open an estate with the probate court to transfer the home, unless they have their home in a living trust or they have previously executed a beneficiary deed. 

            To create a beneficiary deed, the property owner names one or more grantee-beneficiaries to become the owner(s) of the property at their death.  A provision in the deed advises the county assessor that the owner, not the grantee-beneficiary, is to continue to receive tax notices.  The owner remains the owner of the property until their death.  If the owner names multiple grantees and one predeceases the owner, the surviving grantee-beneficiaries will receive the deceased beneficiaries share. 

            A beneficiary deed must be completed and recorded with the county clerk and recorder, in the county where the property is located, before your death to be effective.  It can be revoked, or cancelled by you at anytime before your death by recording a separate revocation form or recording a new beneficiary deed naming different grantee-beneficiaries or by selling the home. A contrary disposition in a will is not effective to revoke a beneficiary deed.   If you apply for Medicaid, the Department of Social Services will require that you revoke the beneficiary deed to become eligible to receive Medicaid. A beneficiary deed allows the owner to maintain lifetime control of their property, because they can revoke the deed and or change the beneficiary designation, prior to their death.

           

A beneficiary deed creates a mechanism for protection from your creditors after your death, but it does not allow your estate to escape all creditors.  Although the transfer of your property is effective at death, and title passes, the property remains unmarketable for a four month period after death.  This allows anyone who has an interest in the property an opportunity to record notice of their interest in the property in the county real estate records.  The grantee-beneficiary takes subject to any preexisting encumbrances or other interests granted by the owner.  In addition, a grantee-beneficiary remains liable to the probate estate for up to one year after the death of the owner if the probate estate is insufficient to pay all claims and or allowances.

            A beneficiary deed can be a very useful, low cost method of transferring real estate upon your death, but your other assets, your needs and your circumstances must be taken into consideration to evaluate if this method of transferring title to your home after your death is right for you.  An estate planning attorney can advise you on whether or not this tool would work for you.

This article was written by Tamra K Waltemath of Tamra K. Waltemath, P.C.  This information is for general informational purposes only and does not constitute legal advice.  For specific questions, you should consult a qualified attorney.

Tamra K. Waltemath is an elder law attorney focusing on wills, trusts, estate and trust administration, probate and non-probate transfers, guardianships and conservatorships.  She can be contacted at:  Tamra K. Waltemath, P.C., 3843 West 73rd Avenue, Westminster, CO  80030; 303-657-0360.

 


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