There was a recent article in the Daily Sentinel that created a lot of buzz with my estate planning clients you can read here. All of sudden, everyone wanted a beneficiary deed. We wrote and recommended such a tool in 2016 It solves everything, am I right? Maybe.
Essentially, a beneficiary deed is executed and recorded like a regular deed, but it has a special designation for your grantee. It is codified in the Colorado Revised Statutes in 2004. It acts like a death beneficiary designation you might have on your checking account or life insurance policy. The grantee does not own the asset until the property owner’s death. You can revoke it any time without the beneficiary’s consent. And you can sell the property without the beneficiary’s consent. However, upon death of the property owner, it will automatically transfer the real property to the listed beneficiaries. If you are worried about avoiding probate, this tool also assists with that.
But there are downsides to a beneficiary deed: If you have two or more beneficiaries on the deed, it could cause a problem down the road. They will each own a portion of the house. The beneficiaries must cooperate, maintain, and consent to sell the property. If not, litigation may result to force the sale of the real property by partition. This example is illustrated in a Washington Post article or this article between two siblings who inherited the house. Of course, the same problem would occur if you devised your house to two or more beneficiaries by Will. The alternative is to appoint one personal representative in your Will to sell and split the proceeds of the house.
Another downside: Because a beneficiary deed it is an incomplete gift before death, Long Term Care Assistance with Medicaid eligibility is an issue (I am referring to Medicaid for Long Term Care Assistance, not Medicare). If you require and need Medicaid Long Term Care Assistance, you cannot keep the beneficiary deed and must revoke it. If Medicaid is part of your estate plan, a beneficiary deed may not work.
A beneficiary deed is a great estate planning tool, but you should consider these questions and consequences before executing one. If you want more information or a consultation regarding your estate plan, please contact the grand junction estate attorneys, Reams & Reams at 970-242-7847 or email us at firstname.lastname@example.org.