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Understanding Home Deeds
When a home is purchased either for cash or with a mortgage, a deed is filed with the proper authority (generally the registrar of deeds) to record the ownership of the property. The deed also shows any liens for monies owed on the property. For most homeowners, until their mortgage is paid in full, the property deed shows the owners name and the primary lien is the mortgage holder. In the event that the home is purchased jointly, the names of both owners would then show on the property deed. In the event that one of the owners was deceased, the proper legal steps would need to be taken to remove them from the property deed.
Notwithstanding this, thousands of people purchase homes annually without a co-owner. In these cases, the property would pass to their estate through the probate process in the event of their death. This would require the property to be put through the probate process. In a small number of states, the probate process may be avoided by utilizing a process called "transfer on death" or a beneficiary deed. One of the benefits of using this process is that the beneficiary of a transfer on death transaction is not subject to a gift tax. The reason for this is that the asset (in this case a piece of real estate) is not transferred to the beneficiary until the death of the legal owner.
The states that currently (as of this writing, April 2011) allow for a beneficiary deed are Nevada, Oklahoma, Wisconsin, New Mexico, Colorado, Indiana, Arkansas, Missouri, Ohio, Arizona, Kansas, Minnesota and Montana.
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Understanding the Beneficiary Deed Process
- A deed would be prepared by an attorney or by the homeowner specifying the beneficiary;
- The deed would be signed by the homeowner and then properly notarized;
- The deed would be recorded with the proper authorities (registrar of deeds or country land records office).
The beneficiaries of a transfer on death or beneficiary deed do not need to be informed of the deed recording unless the homeowner wishes to inform them. Appropriate beneficiaries include a sole owner, multiple owners, any legal entity including trusts or businesses or the trustees of a trust agreement.
It is critical to note that the advantage of a beneficiary deed is that it is revocable, meaning that it can be withdrawn by the homeowner at any time. This is not the case when using a quitclaim deed or other type of deed for transferring ownership of a property.
Claiming a Transfer on Death Property
For the beneficiary of a transfer on death property to claim the property after the death of the owner, the following documents may be required (it is important to check with the appropriate authorities to determine what documents that are required since each jurisdiction may have their own requirements):
Certified Death Certificate - Certification by the town or municipality where the death certificate is filed;
Affidavit of Identity and Survivorship - Each jurisdiction may have their own form. This form states the survivors name, decedents name as well as the date of death. This document will require a notary to validate the information;
Certification of Lien Releases - There may also be additional documents required by the county or state that show that the original property owner was not indebted for any form of public assistance or other indebtedness.
The required documents would then be filed with the registrar of deeds or county land office where the property is located. Most beneficiary deed transfers will not require the involvement of an attorney.
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- Nolo - Randolph, Mary; Avoiding Probate with Transfer-on-Death Accounts and Registrations http://www.nolo.com/legal-encyclopedia/avoid-probate-transfer-on-death-accounts-29544.html
- Epilawg - Sykora, Jayne A Useful Tool: Transfer on Death Deeds http://epilawg.com/2011/02/a-useful-tool-transfer-on-death-deeds/