What is a Beneficiary Deed?

A Beneficiary Deed is for real estate and allows the owner to specify who will own the owner’s interest in the property at the owner’s death. In order for it to be valid, the Beneficiary Deed must be signed, notarized, and filed with the county. This may avoid probate of this asset.

The owner retains full rights of ownership during his/her life, and the beneficiary has no legal rights to the property until the owner’s death. The owner can revoke the Beneficiary Deed and/or record a new Beneficiary Deed to supersede the prior one. On the owner’s death, the most recently filed Beneficiary Deed controls and the interest in the real property vests in the named beneficiary subject to any interests affecting title to the real property. The beneficiary will take the property with an adjusted basis of the value of the property at the time of the owner’s death.

Please be aware that a Beneficiary Deed may complicate Medicaid assistance and should be considered carefully in the event that Medicaid assistance is being sought. In that case, a consultation with an Elder Law attorney should be considered.

There is case law in other states which states that because the ownership of the property transfers immediately upon the grantor’s death, the insurance policy obtained by the decedent does not cover the grantee.  This holding is problematic because between the time of the grantor’s death and the time the grantee insures the property, there is no insurance coverage on the property.   Thus, it is critical that the grantee either be added to the grantor’s insurance policy prior to death or obtain insurance immediately upon the grantor’s death.