Ask the Titleman™ - Beneficiary Deed; Community Property; Probate
by John T. Lotardo aka TITLEMAN™-Sr VP/General Counsel, Stewart Title & Trust of Phoenix
Q. If someone owns a piece of property and then does a Beneficiary Deed to her son and then she dies, does the property go to him? Second Question- If she wants to sell the property and she records the bene deed, will he have to sign off on the property?
A. Good questions since the issues over beneficiary deeds have been multiplying ever since the statute was created to permit Beneficiary Deeds. The purpose of the Beneficiary Deed is to permit the automatic transfer of an interest in real property at the time of death of the grantor without the need of probate proceedings. Your second question was specifically dealt with by the statute which says that the grantor under a beneficiary deed does not need to have the beneficiary/grantee participate in any manner in the sale/refinance (or even foreclosure for that matter) of the real property listed in the beneficiary deed. Many times you will be required to record the death certificate to establish of record that the grantor did die.
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Q. My husband and I each have children from previous marriages. In the event that either of us dies, we want any real estate we own together to go completely to the surviving spouse. We live in Arizona, which I think is a community property state. I thought that we should take title as husband and wife as community property with right of survivorship. Because we have children from prior marriages, I have been told by well meaning friends that if I pass away my husband would only get 50% of my part of the real estate and the rest would go to my children What is the correct way to take title to assure that all of my share of the property goes directly to my husband? Thank you for your help.
A. You have some pretty smart friends. You are correct. Arizona is a community property state. This does cause a split in the inheritance of your property if it is held without a survivorship right. This was intended to protect the children of the deceased person from what I call the “evil stepmother syndrome” where the children get nothing from the surviving non-biological spouse. To combat this statutory protection of step-children, properly holding title as Community Property with Right of Survivorship does ensure that the surviving spouse would get all of the other spouse’s interest in the property. At that point, it is then generally theirs to do what they like with the property- encumber, sell and include in their own will or other estate planning. Speaking of estate planning, you may want to speak with you own financial advisor on the matter to ensure it makes sense from her perspective.
Q. An agent is trying to list/sell a piece of property but had asked about vesting of the subject property. Mom & Dad added their sons- adults and married themselves-using a “Community Property Deed” to avoid probate in the future. Mom & Dad have passed away and the sons are trying to sell. Agent is checking to see if the sons can sell under this deed. I told him I would get your opinion because I think the parents’ interest would have to be probated. FYI, the son had a title company help them with this deed before his parents passed away.
A. I agree that probate proceedings are probably needed. Although one could guess that the parents were trying to hold the interest between the two of them as Community Property with Rights of Survivorship, they created a confusing situation by the way they did added the two sons. The way the vesting is written on the deed you describe has the parents (as husband and wife) and each of the two sons (each married but holding as his sole and separate property perhaps) all four holding together as Community Property with Rights of Survivorship. Well, that just can’t be— the four of them cannot possibly hold title that way—they are not all married to each other. That’s why I am guessing they meant something else. Sadly, I can’t tell from what we know right now. And what about the interest of the sons’ spouses? The married sons could have gotten disclaimer deeds from their spouses to help clarify that the spouses are not claiming their own community property interest in the property. I know that this may have merely been considered a gift to the sons and therefore not involving the spouses. While they are getting this probate issue settled they should get the spouses interest resolved as well.
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Copyright John T. Lotardo. All rights reserved. John Lotardo (aka the TITLEMAN™) is Senior Vice-President and General Counsel for Stewart Title & Trust of Phoenix, Inc., and State Underwriting Counsel for Stewart Title Guaranty Company. He is a member of the National Advisory Councils for GoGetEscrow.com, GoGetLoan.com, GoGetNotary.com and GoGetRealEstate.com. The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. For more about John, visit: www.GoGetEscrow.com/Get/Titleman or www.AskTheTitleman.com.