Financial Information
Catherine Scrivano CRPC, CRC, CEP
602-995-1484

Avoiding Probate Through
Beneficiary Designations

Many people are surprised to learn that they can pass their estates to heirs free of probate proceedings, without drafting expensive trusts or other complicated estate plans. One of the newest tools in Arizona is the Beneficiary Deed, which applies to real property. In April 2001, the Governor of Arizona signed a law that created a new type of Arizona real property deed known as the Arizona Beneficiary deed. By signing and recording an Arizona Beneficiary Deed, owners of real estate located in Arizona may transfer their interest in the real estate to people or entities on the owner's death. The interest in real property conveyed by Beneficiary Deed does not take effect until the death of the owner, at which time that interest transfers automatically by law to the beneficiaries. No probate is required.

Benefits of an Arizona Beneficiary Deed

Property transferred by a Beneficiary Deed avoids the cost and delay of probate because the property is not part of the probate estate of the deceased owner. Avoiding probate can save a family $1,500 to $3,000 or more in legal fees.

• Transferring property by a Beneficiary Deed is a much cheaper method of avoiding probate than a living trust. Estate planning lawyers typically charge $1,500 - $2,500 or more to create a living trust. It is also much simpler than creating and administering a trust. With a Beneficiary Deed, the owner retains total control over the property.
• After a Beneficiary Deed is signed and recorded, the owners may sell, encumber or otherwise deal with their property without any restrictions or limitations.
• The owner may change or revoke a Beneficiary Deed at any time by recording an appropriate revocation with the county recorder of the county in which the property is located

Some Draw Backs to Using an Arizona Beneficiary Deed

• Because the property is not transferred until the death of the last owner, the full value of the property remains in the estate of the deceased for estate tax purposes.
• In general, when there are multiple beneficiaries, they will own undivided interests in the property. This can make managing and dealing with the property more difficult and cumbersome than if it were held in a trust.
• If property is owned as joint tenants with right of survivorship, the last survivor may revoke or modify the deed and change the intention of the prior decedent. One way to avoid this problem is by using a trust that becomes irrevocable after the first death.

The above list is not all-inclusive. We recommend that you consult with an experienced estate planning lawyer to discuss the pros and cons of using an Arizona Beneficiary Deed versus a comprehensive estate plan that includes a will and living trust. It may be that for you, a trust might be a better vehicle to accomplish your estate planning objectives.

We are glad to talk to you about beneficiary designations, titling and other estate planning issues.