Buyers from all over the world purchase real estate in Arizona, largely because of our hospitable climate. Non-U.S. Citizens who purchase real estate in Arizona know they must be cognizant of all the legal implications of owning real estate here. One aspect that sometimes escapes attention relates to what happens to the property when the owner passes away. Fortunately, Arizona beneficiary deeds provide an effective strategy to avoid problems that can arise after the owner’s death.
If you are non-U.S. citizen owner and do not plan ahead, your Arizona property may be required to go through the probate process in the county where it is located, which can be a time-consuming and costly process. A beneficiary deed may provide a solution to address what will happen to your Arizona property after your death.
Our clients at Peterson Law Offices include Canadians, who purchase many winter homes and rental properties in Arizona, and residents of other countries. Whether you are a Canadian who owns property here, or your home is in a different country, we welcome your inquiry about our services, including beneficiary deeds.
An Arizona statute provides for a special type of deed for real estate called a beneficiary deed. This type of deed (which is not available in all states) is also referred to as a transfer-on-death deed or TOD deed.
A beneficiary deed enables the owner of real estate to designate a beneficiary to inherit the property on the owner’s death. The owner does not relinquish ownership or any control over the property by creating a beneficiary deed. The deed and beneficiary designation can be revoked at any time. Using a beneficiary deed works the same way as a transfer-on-death designation on a bank account.
A specific state law (found at A.R.S. § 33-405) governs beneficiary deeds. For a deed to be valid, it must meet all the statutory requirements. The law describes a beneficiary deed as follows:
A deed that conveys an interest in real property, including any debt secured by a lien on real property, to a grantee beneficiary designated by the owner and that expressly states that the deed is effective on the death of the owner transfers the interest to the designated grantee beneficiary effective on the death of the owner subject to all conveyances, assignments, contracts, mortgages, deeds of trust, liens, security pledges and other encumbrances made by the owner or to which the owner was subject during the owner's lifetime.
Under this provision, a beneficiary deed must convey an interest in real estate to a designated beneficiary and expressly state that the property will transfer on the death of the owner.
In addition, to be effective, the deed must be executed and recorded in the county where the property is located prior to the death of the owner or the last surviving owner (if there is more than one owner). It also must meet all the format and substantive legal requirements that apply generally to Arizona real property deeds. The statute further provides that a beneficiary deed is only valid if it meets all the stated requirements and has not been revoked by the provisions of a will.
The law does not require the signature, consent, agreement of, or notice to a beneficiary named in a beneficiary deed.
The law governing beneficiary deeds contains other detailed provisions. A beneficiary deed may include multiple beneficiaries. Title may be conveyed to the beneficiaries as joint tenants with the right of survivorship, tenants in common, as community property to a husband and wife, or any other type of tenancy that is valid in Arizona. Unless the deed specifically provides that the interest conveyed is community property, the interest is the separate property of the beneficiary.
Multiple owners or beneficiaries pose complex legal issues. Additional detailed provisions in the statute govern interests conveyed to multiple beneficiaries in a deed, as well as revocation of a beneficiary deed for property with more than one owner.
For revocation of a beneficiary deed to be effective, the revocation must be executed and recorded prior to the death of the owner making the revocation. For property owned with a right of survivorship, a revocation is not effective unless the last surviving owner executes it.
Beneficiary deeds are an effective estate planning tool worth consideration for non-U.S. citizens who own Arizona real estate. They also may be appropriate for residents of Arizona and other states in some circumstances. Using a beneficiary deed enables a real estate owner to retain full control of the property, while addressing concerns about probate after the owner’s death.
However, there also are other estate planning tools that can address probate concerns. Whether a beneficiary deed is the right approach for a specific individual and property depends on the entirety of the property owner’s family and financial circumstances. Consulting with an experienced estate planning attorney who fully understands Arizona real estate law and beneficiary deeds is the best strategy for determining the appropriate estate plan treatment for Arizona real estate assets.
We provide high-quality legal services at affordable prices. Our services include estate planning and Arizona real estate law. If you are a non-U.S. citizen or a resident of Arizona or another state, attorney Shane Peterson can answer all your questions about beneficiary deeds and related issues. As both a lawyer and licensed real estate agent, Shane is uniquely well-positioned to handle all types matters and transactions involving real estate law and estate planning.
We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.
© 2021 Peterson Law Offices, PLLC