When someone dies, his real estate and other personal property may go into probate, which can be both lengthy and expensive. To prevent this from happening, some people file beneficiary deeds to transfer their real estate to someone else when they die. The laws governing beneficiary deeds differ by state.
By filing a beneficiary deed, real-estate owners name the beneficiaries of their real estate who become the owners upon the death of the grantor without having to go through the probate process.
Recording a Deed
In Missouri, the grantor of a beneficiary deed must be the current owner of the real estate on the deed. If the property has multiple owners, all owners must sign the beneficiary deed in front of a notary public. You must also record the deed with the county recorder of deeds. If you wish to make changes to a beneficiary deed, you must draft a new beneficiary deed, which will render the original deed invalid.
Death of Beneficiary
In Missouri, if the beneficiary is your direct descendant and dies before you do, his interest in the property will pass to his direct descendants. If you don't want this to happen, you must designate "no lineal descendants per stirpes" on the beneficiary deed. If the beneficiary is not your direct descendent, but you do want the estate to pass to his direct descendants if he precedes you in death, then you must designate "lineal descendants per stirpes" on the beneficiary deed.
Joint Tenants with Survivorship vs. Tenants in Common
If you include multiple grantees on a beneficiary deed, you can designate them as joint tenants with the right of survivorship or tenants in common. If a beneficiary dies and you have designated joint tenants with the right of survivorship, the other beneficiaries will inherit his share of the property. However, if you designate tenants in common, the deceased beneficiary's share of the property will pass to his heirs.
Beneficiary Deed Vs. Joint Deed
If you add someone to your deed while you're living by filing a joint deed, the other party becomes part-owner of your property. Your hands are tied if you want to sell the property and the other party doesn't give consent. And if the other party is encumbered with debts, lawsuits or judgments, creditors may attach a lien to your property if you have a joint deed. But if you file a beneficiary deed, you retain all ownership in your property until your death when the property passes to your beneficiary.
Though a beneficiary deed can be useful for avoiding probate, it doesn't transfer any interest in a property until its present owner is dead. If a property has multiple owners, a beneficiary deed won't transfer ownership until all current owners die. If it is likely that other owners of the property will make changes to a beneficiary deed upon your death, it may be wiser to protect your property with a trust.
Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.