There are different types of deeds for real property in Arizona. They can serve different objectives depending on the circumstances. The beneficiary deed is the newest member of the family of deeds in Arizona.
The Purpose of the Beneficiary Deed
What purpose does such a deed serve? It is used as a means to convey real estate to a person or persons intended to receive the property upon the death of the owner(s), without the necessity of probate and without the limitations of using a joint tenancy deed. It permits the owner(s) to retain all of the benefits of the property during the owner’s lifetime. That includes the right to dispose of the property without limitation. However, upon the death of the owner the title to the property is vested in the named beneficiary(ies) in the beneficiary deed. The beneficiary deed is not impacted in any way by anything contained in the last will and testament of the owner.
Most Common Questions About a Beneficiary Deed
The most common question asked concerns what is the difference between a joint tenancy deed and a beneficiary deed? With a beneficiary deed the named beneficiary(ies) have absolutely no interest in the real property during the lifetime of the owner. That is why the owner is able to freely convey title to the property during his/her/their lifetime. The transfer of title or any interest in the property only occurs upon the death of the owner. However, with a joint tenancy deed the owner cannot convey the title to the property without the written consent of the joint tenant(s). That is because upon the creation of a joint tenancy title the new party brought in as a joint tenant acquires an immediate interest in the title to the property. Thus, once a joint tenancy is created, there is a limitation on the ability of the original owner to alienate (convey) or sell the property without obtaining the written permission of the other joint tenant(s). However, once the original owner dies both the beneficiary deed and the joint tenancy deed operate in the same manner. However, upon the death of the original owner the public record needs to be clarified as to who the new owner(s) is or are.
After the death of the original owner the public record is clarified and memorialized in the same manner for both the beneficiary deed and the joint tenancy deed. It is necessary to prepare and record with the county recorder’s office an affidavit clarifying that the original owner died and disclosing the contents of the deed and attaching it together with a copy of a certified copy of the death certificate of the original owner.
A Joint Tenancy Deed
A joint tenancy deed has often been labeled a ‘poor man’s will’ since the disposition of the title interest of the deceased joint tenant occurs instantly upon death of the other joint tenant and does so without regard to what a will of the decedent may say. For example a joint tenant’s Will may leave everything to his/her children. However, if the decedent has his or her home in joint tenancy with a friend then the friend will take the interest of the deceased joint tenant despite what the decedent’s will says. A person can be made a joint tenant without their knowledge or consent. Both the joint tenancy deed and the beneficiary deed avoid the necessity of a probate at least as to the title to the property so held.
There is some risk with a joint tenancy deed concerning liability. If an owner places a joint tenant on title and the new joint tenant is sued and has a judgment lien placed on their property it can affect the title to the original owner’s property. With a beneficiary deed the beneficiary has no interest in the title until the original owner dies.
Likewise, a beneficiary can be named in a beneficiary deed without their knowledge and upon death of the owner the title will go to the beneficiary without regard to the decedent’s will. The difference is that with a beneficiary deed the owner can change their mind and terminate the beneficiary deed without the consent of the beneficiary.
Like most things in the law it is wise to understand and plan the use of such titles as a joint tenancy or a beneficiary deed. There are effective tools under the right circumstances. It is important to review estate plans periodically. Experts differ but that process should occur at least every three to five years since people’s circumstances change. There is a necessity of coordinating property held in joint tenancy and/or by a beneficiary deed with one’s will and/ or their trust. Sometimes people change their mind and consequently change their will but forget their real estate is held in joint tenancy or under a beneficiary deed. In such a situation the change in the will or trust won’t impact the legal effect of a property held in joint tenancy or under a beneficiary deed.
If you have any questions it is prudent not to utilize such deeds unless you understand completely the legal impact of such instruments. Although they can be extremely effective legal tools for estate planning purposes, they could create unintended consequences in the future.