What is a Beneficiary Deed?

Estate planning, Beneficiary Deed

In Arizona, a beneficiary deed allows property to be transferred to someone else automatically when the current owner dies. Some homeowners use a beneficiary deed to bypass probate. The homeowner keeps control of the property, including the ability to sell or refinance the property even if they have recorded a beneficiary deed. Beneficiary deeds are revocable. In other words, the homeowner can change their mind after recording a beneficiary deed as long as they still own the property and record a new deed. Beneficiary deeds can be recorded for property even if there is a secured debt or lien on the property. The grantee of a beneficiary deed does not have any rights to the property until and unless the record owner of the property passes away.

Arizona beneficiary deeds clearly or expressly state a grantee beneficiary or beneficiaries and that the deed is effective on the death of the owner transfers the interest to the designated grantee beneficiary effective on the death of the owner subject to all conveyances, assignments, contracts, mortgages, deeds of trust, liens, security pledges and other encumbrances made by the owner or to which the owner was subject during the owner's lifetime. The beneficiary deed can designate more than one grantee and designate how the multiple grantees take title if the record owner passes away, e.g. joint tenants with right of survivorship, tenants in common, a husband and wife as community property or as community property with right of survivorship, or any other tenancy that is valid under Arizona law.

Beneficiary deeds can also designate a secondary individual or individuals, or a successor grantee beneficiary, to take title of the property if the grantee beneficiary predeceases, or dies before the owner of the property passes away.

Under Arizona law, a beneficiary deed must be executed and recorded pursuant to the applicable laws of the county where the property is located before the record owner passes away to be considered valid.  Arizona Revised Statutes § 33-405 also sets minimum requirements for the acceptable form of a beneficiary deed.  

An attorney can assist you with determining whether a beneficiary deed achieves your objectives for the transfer of your property. Depending on your goals, a beneficiary deeds can be used as part of an overall estate plan or as a stand-alone document to achieve the desired transfer of your real estate in the event you pass away.