I have discussed in this space in the past a method of estate planning for real estate known as the beneficiary deed. This form of estate planning has, as I expected, become popular very quickly as a way to transfer real estate to a person’s successors without an estate administration and without the potential problems of using a joint tenancy deed. Because I have been getting frequent questions about various possible uses of the beneficiary deed, I decided that now would be a good time to revisit the subject and to discuss the use of a beneficiary deed for property with multiple owners and multiple beneficiaries.
The beneficiary deed does for real estate what the “payable on death” or “POD” designation does for a bank account. It allows the owner to designate a beneficiary for that asset and creates a method by which ownership of the asset will transfer directly to the beneficiary upon the owner’s death.
In the past, a joint tenancy deed would often be used to plan for the transfer of property from parent to child. The difference between a beneficiary deed and joint tenancy is that with joint tenancy, all of the joint tenants (owners) have a present ownership interest in the property. With a beneficiary deed, the beneficiary has no ownership interest in the property until the present owner dies. This means that the owner retains complete control of the property while he or she is living, and the beneficiary has no control over the property until the owner dies.
A beneficiary deed can name one or multiple beneficiaries, and can be given by one owner or multiple owners. If there are multiple owners, all of them must sign the beneficiary deed in order to transfer the entire ownership of the property. If there are multiple beneficiaries, the title can pass to the beneficiaries in any legal form of ownership.
For example, a husband and wife who own a residence as community property with right of survivorship and who have two children can by a beneficiary deed give the residence to the two children effective only when both parents are deceased. The beneficiary deed can specify that the beneficiaries (the children, in this example) shall own the property as joint tenants with right of survivorship or as tenants in common. A beneficiary deed could also name a husband and wife as beneficiaries and specify that they are to own the property as community property with right of survivorship.
A beneficiary deed may even be used to transfer property to a trust. Ordinarily a person creating a revocable living trust transfers their property to the trust as soon as the trust is created, but there may be circumstances where a person would want to delay such a transfer until their death. Using a beneficiary deed under those circumstances would avoid the need for a probate transfer of the property.
The law creating the beneficiary deed has now been in effect for over ten years, so it has become pretty well known. A beneficiary deed will not be the right method for everyone, but it can be an effective way for many people to pass property to their successors without the potential problems of joint tenancy or the need for a probate proceeding.
DID YOU KNOW THAT SEPTEMBER 17 IS CONSTITUTION DAY?
Well, if you didn’t, now you do. Actually, you almost certainly learned in school that the United States Constitution was signed on September 17, 1787. You probably just forgot. It’s not a date that sticks in your mind quite like July 4, or even June 14 (if you don’t remember what June 14 is, look it up).
I’m not as conversant with our country’s history as I should be, and as a result I’m not one to spend much time discussing it. If there is one particular aspect of the founding of our country that I am familiar with, it is, of course, the Constitution. After all, I’m a lawyer.
If you haven’t read the Constitution since you were in school, go read it. It’s short. You can find what I presume is an official transcript of it on the web site of the National Archives, at www.archives.gov. It is not only shorter, but also less obscure, than most people probably realize. If more people read it, and have a basic understanding of it, the country can only benefit.
QUOTE OF THE MONTH
In three words I can sum up everything I’ve learned about life: it goes on.
∞ Robert Frost, US poet (1874 – 1963)