Owning real estate can be a great way to invest. However, when it comes to estate planning, property is often difficult to protect. You want to ensure your loved ones receive the fruits of your labor.
A beneficiary deed, also known as a transfer-on-death deed, allows individuals who own real estate to transfer their property to their heirs after they die. Unlike other deeds, a beneficiary deed does not become effective until the last owner of the property passes away. In some cases, estate planning tools such as wills and trusts are unnecessary.
Probate is a time-consuming and costly process that assets go through when there is no estate plan. Having a beneficiary deed will protect your transferring assets and ensure it all goes to the right people.
A beneficiary deed also protects property from potential conflicts, such as disgruntled relatives.
Completing an estate plan
A beneficiary deed is often useful in completing an estate plan. In this case, real estate within the beneficiary deed transfers into a trust after the last owner dies. Trusts provide control over the distribution of property and an extra layer of protection. Saving money is another notable benefit, as it does not present interest for your heirs and can minimize estate taxes.
When setting up a beneficiary deed, you will identify yourself as the grantor and your heir as the beneficiary. It is important that a beneficiary deed is properly recorded in the Office of the Recorder of Deeds for the County where the property is located. A beneficiary deed presents some disadvantages if done incorrectly. Every estate planning need varies, and may require a unique approach.