Is there a way I can transfer property to a loved one and avoid probate? Yes, there is! If you own real estate in your sole name (i.e. without a co-owner), you have limited options if you want to pass the property to a beneficiary at your death without the necessity of probate. An easy solution is a beneficiary deed. A beneficiary deed, (i.e. a transfer on death deed), is a special type of deed that can be utilized to transfer ownership of real estate outside of probate in Colorado.
How Does a Beneficiary Deed Work?
A beneficiary deed is a simple, one-page document that can be provided by an estate planning attorney. The beneficiary deed should be prepared and signed now, stating that you plan on moving your property from your sole name into the name of your beneficiary at the time of your passing. You continue to own the property during your lifetime so you retain the right to mortgage it or sell it. Your beneficiary has no legal right to the property until your passing.
You do have to record the deed with the county land records office where the property is located. If you change your mind — perhaps you decide you want to leave the property to someone else at a later point in time — you can simply revoke the deed or create and record a new one to supersede the old one, and transfer the property to someone else. Upon your passing, the death certificate will be recorded with the same public land records office where the beneficiary deed was recorded. This puts the world on notice that title to the real estate has been transferred into the name of the beneficiary listed in the beneficiary deed due to the owner’s death.
Because you are not technically giving the property away during your lifetime, the deed will not incur a gift tax. However, the property will contribute to the value of your estate for estate tax purposes.
That is how to avoid probate of real property via a simple beneficiary deed!
If you have any questions about this blog, or wish to obtain a beneficiary deed, please contact Anne McMichael ([email protected]) or Jill Curry ([email protected]) via email or telephone (303-572-4200) today.