What to Consider Before Executing a Beneficiary Deed in Colorado
By Kate Jaquith
Beneficiary deeds enable real property owners in Colorado to transfer their property to a designated beneficiary upon death without having to go through probate, which may help save time and money in the administration of the estate.
Under C.R.S. §15-15-404, in order for a beneficiary deed to be effective it must contain the words “conveys on death” or “transfers on death” or “otherwise indicate the transfer is to be effective on the death of the owner.” The beneficiary deed must be signed in front of a notary and then recorded in the clerk and recorder’s office in the county where the real property is located. The interest in the property immediately transfers to the beneficiary upon the death of the owner (a beneficiary can also disclaim their interest if they do not want the property).
While executing a beneficiary deed in Colorado makes transferring property upon death simple, there are some unique considerations to be aware of before executing one.
First, a beneficiary deed can only be revoked by recording a signed document in the county clerk and recorder’s office that describes the real property and explicitly revokes the beneficiary deed. A beneficiary deed cannot simply be revoked by a will or other unrecorded document.
Next, executing a beneficiary deed will not sever a joint tenancy. If one joint tenant executes a beneficiary deed and predeceases the other joint tenant, the property will still pass to the surviving joint tenant upon death. Multiple joint tenants can execute a beneficiary deed to take effect upon the death of every joint tenant, so if a married couple wants to leave their property to their children, they can still accomplish that with a beneficiary deed.
Third, you cannot avoid debts by executing a beneficiary deed. If your probate estate is insufficient to satisfy your debts upon your death, a creditor can potentially recover their claim from your beneficiary up to the value of the property that was transferred.
Finally, executing a beneficiary deed disqualifies you from Medicaid eligibility so long as the beneficiary deed is in effect.
If you are considering whether executing a beneficiary deed in Colorado is right for your estate plan, please call our office and ask to speak with one of our estate planning attorneys.