What is a Beneficiary Deed?
An Arizona Beneficiary Deed is a special type of deed that is used to transfer an owner’s interest in Arizona real property to another person or entity at death. This includes transferring property to the person’s Revocable Living Trust. Once a person creates and executes an Arizona Beneficiary Deed, they need to record it with the county recorder of the county in which the real property is located. After the person passes, a certified copy of the person’s death certificate must be recorded with the same county recorder. Upon recording the death certificate, the transfer to the new beneficiary(s) named in the deed is complete. Arizona Beneficiary Deeds are governed by Arizona Revised Statutes § 33-405.
A Beneficiary Deed is an easy to use and inexpensive estate planning tool that can be used by anyone who owns Arizona real property:
1. If an Arizona resident has no estate plan their real property will pass pursuant Arizona’s laws of intestate succession. This means that the property owner will have no say about who gets their property at death. The person who inherits the property might not be the person the owner wanted to inherit the property. On the other hand, if the owner of the property records an Arizona Beneficiary Deed, they can be confident that the right person will inherit their real property – even if they don’t have an estate plan.
2. If a person has created an estate plan, they should execute an Arizona Beneficiary Deed as part of their comprehensive plan. When a person creates an Arizona Beneficiary Deed, probate will not be needed to transfer title of the person’s real property. While probate may need to be opened to transfer their other property, their real property will transfer via the Beneficiary Deed and outside the probate action..
3. If a person has an estate plan that includes a Revocable Living Trust, using an Arizona Beneficiary Deed is an easy way of transferring their real property into their Trust. One of the reasons transferring property into Revocable Living Trust (called “trust funding”) is to avoid probate. If the trustmaker transfers all of his or her assets to the trust before death, there is no need for probate. As trust funding is critical to avoiding probate, a Beneficiary Deed is an important estate planning tool for people with Revocable Living Trusts.
4. Regardless of whether a person has an estate plan, using a Beneficiary Deed may also avoid help probate by removing the real property from the decedent’s probate estate. Arizona offers probate exemptions for “small estates” meaning that the deceased person’s real property is valued at or less than $100,000 and their personal property is valued at or less than $75,000. For example, say a person’s interest in real property is worth $200,000 and their personal property is worth $30,000. If that person used a Beneficiary Deed to transfer their real property, his or her loved ones could then use an Affidavit for the Collection of Personal Property to transfer the person’s personal property, thereby avoiding probate entirely.
5. In some situations it is easier to use a Beneficiary Deed to transfer title to real property to a Revocable Living Trust instead of transferring the property immediately into the Trust. Let’s say a person has a Revocable Living Trust and wants their real property to go into their Trust. If they immediately deed their property into their Trust, they would likely have to pull it out of the Trust and put it back in every time they wanted to refinance their property. This is a pain and will cost extra money every time they want to do this. By using an Arizona Beneficiary Deed, they can refinance their property without affecting the ultimate transfer of the property in their Trust at death.
6. A Beneficiary Deed is a superior to using a joint tenancy with right of survivorship (JTWROS) designation for real property. Parents may want to use a JTWROS designation on their deed to ultimately transfer the title of their property to their children at death. However, remember that property liability typically falls to the owners of the property. If something were to happen on mom and dad’s property, with a JTWROS deed, the kids would also be liable for whatever happened on the property. With a Beneficiary Deed, mom and dad would retain total ownership of the property until their deaths, at which point it would transfer directly to their children. Another benefit over using an Arizona Beneficiary Deed over a joint tenancy deed is that the Beneficiary Deed is always revocable during the owner’s lifetime. If the owner made a child a JTWROS, the owner would need the child to sign off to change the deed.
7. Once a Beneficiary Deed is signed an recorded, the property owner can sell their property, take out a mortgage on their property or refinance their property without restriction. A property owner can also change or revoke an Arizona Beneficiary Deed at any time. The Beneficiary Deed method makes it easy to deal with property without worrying what will happen to it at the owner’s death.
8. If a property owner signs and records on Beneficiary Deed and later signs and records another Beneficiary Deed, this will not adversely affect the title of the property. The last Beneficiary Deed to be validly signed and recorded will control.
Who Can Receive Property Via An Arizona Beneficiary Deed? How Can They Take Title?
The person named to receive the property upon the property owner’s death is called a grantee. A property owner may name a person, trust or entity as a grantee. A Beneficiary Deed may designate multiple grantees who can title as 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. An Arizona Beneficiary Deed may designate a successor grantee beneficiary. If the beneficiary deed designates a successor grantee beneficiary, the deed shall state the condition on which the interest of the successor grantee beneficiary would vest.
When Will A Beneficiary Deed Not Work?
Beneficiary Deeds can be problematic if the owners of the property own their interests as joint tenants with right of survivorship or community property with right of survivorship. If both owners execute an Arizona Beneficiary Deed naming one or more grantees and the last owner to die does not revoke the Beneficiary Deed, then the property will transfer to the grantees listed in the Beneficiary Deed. However, if only one owner executes a Beneficiary Deed, then it may or may not be effective depending on which owner dies first. Because of the “right of survivorship” ownership, if the owner who executed the deed dies, his interest goes to the other joint owner – not the grantees listed on the Beneficiary Deed. On the other hand, if the owner who executed the Beneficiary Deed was the last to die, the grantees listed in the Beneficiary Deed would take title to the property.
What Is Required For A Beneficiary Deed To Be Valid?
To be valid, an Arizona Beneficiary Deed must:
1. Be signed by the property owner and notarized,
2. Be recorded in the county where the real property is located,
3. Be recorded during the property owner’s lifetime, and
4. Accurately state the legal description of the real property.
Arizona Revised Statutes § 33-405(K) gives an example of what a valid Arizona Beneficiary Deed would look like:
I (we) _________________________ (owner) hereby convey to ___________________________ (grantee beneficiary) effective on my (our) death the following described real property:
If a grantee beneficiary predeceases the owner, the conveyance to that grantee beneficiary shall either (choose one):
 Become null and void.
 Become part of the estate of the grantee beneficiary.
(Signature of grantor(s))
What Is Required For A Valid Revocation Of An Arizona Beneficiary Deed?
L. The instrument of revocation shall be sufficient if it complies with other applicable laws and is in substantially the following form:
Arizona Revised Statutes § 33-405(L) gives an example of what a valid Revocation of a Beneficiary Deed would look like:
Revocation of Beneficiary Deed
The undersigned hereby revokes the beneficiary deed recorded on ___________ (date), in docket or book ______________ at page ________, or instrument number ____________, records of ________________ county, Arizona.
Arizona Beneficiary Deed Preparation Service & Pricing
In addition to the requirements listed above, Arizona deeds have some additional specific requirements in order to be valid. As such, it is always best to seek the advice of a lawyer when transferring title to real property. Neal Law Firm can prepare and record your Arizona Beneficiary Deed for $225, including recording fees. (Please add $10 for deeds to be recorded outside of Maricopa County.)
Our Arizona Beneficiary Deed preparation includes the following services:
1. Assistance with obtaining the current deed to the property. If you don’t have the current deed, we will tell you how to obtain it. Alternatively, you may pay us a fee to obtain the deed for you.
2. Prepare an Arizona Beneficiary Deed.
3. Record your Beneficiary Deed with the appropriate county recorder and pay the recording fee.
4. Mail you the recorded copy of your Beneficiary Deed.
Learn more about our estate planning services including Wills and Trusts.