ARIZONA BENEFICIARY DEED

In Arizona, a "beneficiary deed" may be used to transfer ownership of property upon death of the grantor. The beneficiary deed does not transfer any present ownership interest in the property and is revocable at any time by the grantor. Accordingly, a beneficiary deed may be used to avoid probate.

There are, however, significant disadvantages to the use of a beneficiary deed. Joint owners (such as spouses) can defeat the purpose by revoking the deed after the death of the first joint owner. Where there are multiple beneficiaries the interests will require assent of all of the owners to manage or deal with the property. In these situations the possibility of conflict is increased.

Another disadvantage is that for estate tax purposes, the full value of the property remains in the owner's estate. Also, a beneficiary deed can result in significant expense and inconvenience if any of the beneficiaries are minors because a Conservatorship may be required to manage the minor's interest.

All deeds must conform to the requirements of the recording laws before the County Recorder will accept the document for recordation. There are requirements for the margins of the page, for the signature, for the legal description, for the notarization and for other aspects of the document. An improperly drafted deed, or one which does not conform to all of the legal requirements is likely to create problems which may not be discovered for months, years or decades.

A beneficiary deed should be used only when all of the relevant factors have been considered and determined. Some of the relevant factors are: 1) whether the property is residential or commercial; 2) how many owners are involved; 3) when was the last title insurance policy obtained; 4) can a title insurance endorsement be obtained; 5) has the grantor made a valid Last Will; 6) has the grantor prepared a proper durable power of attorney; 7) what is the potential value of the grantor's total estate; 8) what is the marital status of the grantor; how many beneficiaries are involved; 9) what is the relationship between the grantor and the beneficiary; and 10) are there any mortgages, liens or encumbrances on the property.

For assistance with an Arizona beneficiary deed, contact us.

The old Arizona statute on beneficiary deeds is set forth below.

Arizona Revised Statutes, Section 33-405. Beneficiary deeds; recording; definition:

A. A deed that conveys an interest in real property, including any debt secured by a lien on real property, to a grantee designated by the owner and that expressly states that the deed is not to take effect until the death of the owner transfers the interest to the designated grantee beneficiary effective on the death of the owner. The grantee may be a multiple grantee or a successor grantee, or both. A multiple grantee may be a joint tenant with right of survivorship, a tenant in common, a holder of community property or community property with right of survivorship, or any other tenancy that is otherwise valid under the laws of this state. A grant to a successor grantee shall state the condition on which the interest of the successor grantee would vest.

B. If real property is owned as joint tenants with the right of survivorship or as community property with the right of survivorship, a deed that conveys an interest in the real property to a grantee designated by all the then surviving owners and that expressly states that the deed is not to take effect until the death of the last surviving owner transfers the interest to the designated grantee beneficiary effective on the death of the last surviving owner. If a beneficiary deed is executed by only one or fewer than all of the owners of real property owned as joint tenants with right of survivorship or community property with right of survivorship, the beneficiary deed is valid if the last surviving owner is one of the persons who executes the beneficiary deed. If the last surviving owner did not execute the beneficiary deed, the deed is invalid.

C. A beneficiary deed is valid only if the deed is executed and recorded as provided by law in the office of the county recorder of the county in which the property is located before the death of the owner or the last surviving owner. A beneficiary deed may be used to transfer an interest in real property to a trust estate even if the trust is revocable.

D. A beneficiary deed may be revoked at any time by the owner or, if there is more than one owner, by any of the owners who executed the beneficiary deed. To be effective, the revocation must be executed and recorded as provided by law in the office of the county recorder of the county in which the real property is located before the death of the owner who executes the revocation. If the revocation is not executed by all the owners, the revocation is not effective unless executed by the last surviving owner.

E. If an owner executes and records more than one beneficiary deed concerning the same real property, the last beneficiary deed recorded is the effective beneficiary deed.

F. This section does not prohibit other methods of conveying property that are permitted by law and that have the effect of postponing enjoyment of an interest in real property until the death of the owner. This section does not invalidate any deed otherwise effective by law to convey title to the interests and estates provided in the deed that is not recorded until after the death of the owner.

G. A beneficiary deed is sufficient if it complies with other applicable laws and if it is in substantially the following form:

Beneficiary Deed

I (we) hereby convey to ______________________ (grantee) effective on my (our) death the following described real property:

(Legal description)

___________________________

(Signature of grantor(s))

(acknowledgment).

H. The instrument of revocation shall be sufficient if it complies with other applicable laws and is in substantially the following form:

Revocation of Beneficiary Deed

The undersigned hereby revokes the beneficiary deed recorded on ___________ (date), in docket or book ______________ at page ______, or instrument number ___________, records of ________________ county, Arizona.

Dated: _______________________

______________________________

Signature

(acknowledgment).

I. For the purposes of this section, "beneficiary deed" means a deed authorized under this section.

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