Arranging for the transfer of real estate is often one of the most important parts of estate planning. A testator planning for their estate will likely invest significant time and consideration into the best way the transfer ownership of their house to their loved ones after they die. They will also consider how to make their plans fair, as other assets may be worth far less than their home.
There are numerous tools that can assist someone in the bequest of real estate, and all of these tools have their own benefits and drawbacks. A beneficiary deed is a document that will transfer a piece of real estate to a specific beneficiary from an estate plan after someone’s death.
Is this tool the best means of transferring real estate in an estate plan in Colorado?
Beneficiary deeds have noteworthy limitations
People choose beneficiary deeds to transfer real estate for several reasons. One is that they see the use of a deed as simpler than requiring the property to pass through probate court prior to the transfer.
However, avoiding probate with a piece of real estate can have its own implications. One of the most important is for the testator who owns the property. Having a beneficiary deed may prevent that person from qualifying for Medicaid benefits because the beneficiary deed allows that applicant to avoid estate recovery efforts.
There are other potential issues, including the possibility of someone losing a deed executed years before a transfer would need to take place and possible tax implications for this kind of transfer.
What are some other solutions for handling your real estate?
There are numerous ways to handle real estate in your estate plan. If you don’t have a specific person who wants to inherit the property, you might want to order your executor to sell the property.
If you have someone who wants to live in the house, it may make sense to transfer ownership of the property to a trust. That way, you can grant tenancy right without risking the loss of your house if you need Medicaid or die with debt. Exploring the different ways to transfer your house can help you create an estate plan that reflects your values and wishes.