A beneficiary deed allows a property owner to name a beneficiary who obtains the title to the property at the owner’s death without the hassle of probate, according to Susan N. Gary writing for the American Bar Association. It is also known as a transfer-on-death deed.Continue Reading
A property owner who wants to use a beneficiary deed to pass on property must execute and record the deed before death. All statutes require the deed to be recorded to have effect, states Gary. If desired, the deed can subsequently be revoked by the owner by executing a subsequent deed or instrument of revocation. The follow-on document must be recorded to be effective.
A beneficiary deed offers a number of advantages over other means of transferring property after death. Since the property is not considered a completed gift, there is no gift tax. In fact, there are no tax consequences at all when executing a beneficiary deed, notes Gary. It is also less expensive than a trust or will, and gives the owner the option to change the beneficiary any time before death. The beneficiary has no interest in the property until the death of the owner, so his creditors cannot reach the property.Learn more about Financial Planning