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A beneficiary deed is commonly associated with real estate and property because it is a document used to determine who will receive real estate property when the original owner dies. Those who receive the property as the result of the beneficiary deed are referred to as beneficiaries. This document is important because it allows for a smooth flow between past and present owners, without a long waiting period for probate.
A beneficiary deed is completed before the original owner passes away. Although it is re-titled in the beneficiary’s name at this time, the original owner still has rights to the property. He or she is still legally allowed to live on the property and can refinance it. The original owner can also rent out rooms for living space or office space. Essentially, the original owner can do whatever he or she pleases with the property until the time of his or her death, without the permission of the beneficiary.
The legal aspects of beneficiary deeds vary from state to state. In Missouri, for example, the potential beneficiary is required to obtain spousal approval before he or she can be added to the deed. The spouse must present written consent to the transfer of property. In addition, the spouse is entitled to ask for half of the property as payment for signing the transfer allowing the deed to be completed.
In Colorado, the laws regarding beneficiary deeds are slightly different. First, an affidavit is required in order to avoid a full probate process with the beneficiary deed. In addition, the value of the personal property in question must not exceed 50,000 US dollars (USD). Colorado law also states that beneficiary deeds must be recorded before the death of the owner. The penalty for not recording the deed results in the beneficiary losing rights to the property, as it reverts back to the owner’s probate estate.
While the original owner is still alive, he or she can re-direct the beneficiary deed to someone other than the original beneficiary. In order for the new beneficiary to be recognized, however, the original owner needs to obtain a recorded revocation before creating a new deed.