Beneficiary Deed

In previous posts about concurrent rights of ownership and the contents of a probate estate, I discussed different ways of holding property and what benefits exist for tax and probate purposes. I have also previously commented on the benefit of receiving property under a will because of the stepped up basis the recipient has in the property. Here I want to discuss beneficiary deeds; a relatively new option about one third of states offer to real estate holders.

A beneficiary deed has multiple benefits. Comparable to holding property in joint tenancy, which allows a decedent’s interest in real estate to transfer to the survivor automatically by law, a beneficiary deed avoids probate issues by allowing the property to transfer by law to the individual(s) listed as beneficiaries on the deed.

Another benefit is the ability for the recipient to receive a stepped up basis in the property. So though the property is received as an effect of the law, the property is treated as if it were received by inheritance rather than a gift because the beneficiary deed does not create a present interest in the property for the beneficiary (which also has benefits if you do not want the beneficiary to have a say in what you do with the property before your death).

Though not perfect for everyone, utilizing a beneficiary deed is one option worth considering for anyone who owns real property in a state that allows for their use and wants to avoid probate in the transfer of their real property at death.


Image by: The Richardsons