Transferring Property To Heirs Can Be A Hassle!
Wouldn’t you like to pass your property in a way that helps your heirs avoid an expensive and possibly lengthy probate?
A transfer-on-death deed does just that.
How We Transfer Property
Deeds usually convey property immediately in Arizona. So, if you sign a deed transferring your home to your son, he would take ownership immediately. Another way to pass on property is through your Will or a trust.
A transfer-on-death deed, otherwise known as a beneficiary deed, handles the property transfer in a completely different way. The process is still about the same: draft the deed, sign the deed, record the deed. However, the transfer-on-death deed does just what the name implies: it transfers the property on the death of the grantor, the owner who is transferring the property.
Why We Use The Transfer-On-Death Deed
One great reason: avoiding probate. When you use a transfer-on-death deed to pass on your property, your heirs don’t have to wait through probate to get the property. It passes to them automatically.
However, the property owner still owns and the property that’s transferred in the deed. In our situation, Marvin could sell the property or mortgage it before his death. His heirs, however, can’t sell, mortgage, or otherwise dispose of the property while Marvin is still alive.
The property owner has the right to revoke the beneficiary deed at any time. If Marvin changes his mind about giving the property to his son and daughter, he can either formally revoke the deed or file a new deed that takes the place of the first one.
For example, let’s say Marvin signs a transfer-on-death deed for his home and the 12 acres of ground around it. He is the grantor. His son and daughter are the grantees. After signing the Will, Marvin lives another 15 years before passing away. He still owned the property at the time of his death, and the transfer-on-death deed has not been revoked, his son and daughter take the property.
Downsides To The Transfer-On-Death Deed
The value of the property is still considered part of your estate when it comes time to calculate estate tax.
Unlike trusts, beneficiary deeds don’t offer any form of asset protection for the beneficiaries in Arizona.
There can be problems if the beneficiary dies before the grantor. If Marvin’s son passed away before Marvin, his estate will not receive the share of Marvin’s property that passes through the beneficiary deed. It’s difficult to build a successor beneficiary structure into the transfer-on-death deed. Another good reason to update your estate plans in Arizona!
This type of transfer may affect your ability to get Medicaid benefits to pay for long-term care. Also, unlike other estate planning tools, the transfer-on-death deed does not address incapacity.
Find Out If A Transfer-On-Death Deed Is Right for You
At Keystone Law, we know that estate plans should help you in all areas of your life. Our attorneys help clients like you decide how to develop a personal estate plan. Call us at (480) 418-8448 or visit our events page to check out some of our free seminars. We offer services for clients throughout Arizona, including Chandler, Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.
