There is a simple and effective way to avoid probate of your residence. A beneficiary deed allows you to retain ownership of your house while designating who should receive the property upon your death. It doesn’t affect your mortgage or title until something happens. It’s a smart tool for you to consider in your estate plan given its flexibility and benefits. Especially if you consider your house to be your main asset.
A transfer on death deed is similar to a beneficiary designation.
A recorded, beneficiary deed stays dormant until something happens to you. Just like a beneficiary designation on a bank account, you own the property until you pass. Upon death, the beneficiary deed works to transfer your property to the beneficiary (or beneficiaries) you have named without going through probate. It is simple and effective. Plus, you retain complete control over your real estate while you’re still alive. Your beneficiaries will have no right to your property and you can sell, mortgage, transfer, assign new beneficiaries, or revoke the deed. If your home is jointly owned, the transfer on death deed does not apply until all the co-owners have died.
The beneficiary deed is a non-probate transfer
Similar to other beneficiary designations, the rights of the beneficiaries on your beneficiary deed supersede those of the people you name in your will. For example, if you give a property to your sibling in your will, but your children are named as the beneficiaries on the beneficiary deed, your kids receive the real estate.
You are in control.
A beneficiary deed can be modified or revoked at any time. If circumstances change or you simply change your mind, just revoke the old beneficiary deed or have a new one prepared with different beneficiaries. This allows you to ensure your home is placed into the hands of your beneficiaries as fast as possible and without going through probate. It is part of a simple and smart estate planning strategy.
Doesn’t impact your mortgage.
A properly crafted beneficiary deed will not impact your mortgage. Because you are still the owner of the property, the mortgage is not impacted; however any liens or other claims against the property will generally stay with the property. So, your beneficiaries will take the property subject to any mortgages secured by the property.
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Todd Rasmussen, lawyer, is responsible for the content in this blog. His wills and trusts law firm, Estate Planning Kansas City, helps clients with their estate planning needs. This article is intended for informational purposes only and is not intended to render legal advice. The choice of a lawyer is an important decision and should not be made solely on the basis of this article.