Beneficiary Deeds, A Useful Tool In Avoiding Probate

No trust, no problem. An uncomplicated estate can avoid probate through a beneficiary deed.

Beneficiary deeds are becoming the option of choice when doing estate planning for uncomplicated estates. A beneficiary deed allows a grantor to transfer a home or other parcel of Arizona real property to a family member effective upon his or her death. They are simple, inexpensive and can be changed at any time during the grantor’s life. In addition, beneficiary deeds have the substantial advantage of avoiding probate.

Because of their utility, beneficiary deeds are sometimes improperly used. The Arizona Court of Appeals recently ruled in such a case in In re Augusta A. Ganoni, 1 CA-CV 14-0240, 5/28/15.   The Court of Appeals decided that only a natural person can use a beneficiary deed. The reasoning was that, under the statute, transfer of title is only “effective upon the death of the owner.”   Since Corporations, LLC’s and Trusts do not “die” as a natural person does, they cannot use a beneficiary deed to transfer title to real estate. The Ganoni Court found that the trustee of a trust cannot use a beneficiary deed to transfer trust real property.

It remains possible, in a proper case, to still avoid a probate by the transfer of the real estate from one of these entities to a natural person and then record a beneficiary deed to transfer title upon the death of the natural person. However, this is a procedure that can have tax, title or other issues and is not recommended unless approved by your CPA and real estate lawyer.

If you have a simple estate and wish to learn more about the use of a beneficiary deed to avoid probate costs, call Platt & Westby, PC at 602.277.4441 to speak with one of our experienced estate planning attorneys.