REAL PROPERTY SERVICES

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The Thompson Law Group, P.C. is committed to providing quality legal service at reasonable rates. It is our hope that should a problem arise for a client, that we are able to resolve our client’s issue as quickly, cost-effectively, and as beneficially as possible.

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Beneficiary Deeds Q&A

Why do I need a beneficiary deed?

Arizona law allows the owner of real property to convey all their interest in real property to a designated beneficiary to be effective only upon the owner’s death. For many people, their home is their greatest asset, and they want to be able to transfer it to a certain person or persons in a simple, inexpensive means that avoids probate. A beneficiary deed will accomplish this transfer without the need of a formal probate.

What are the advantages of using a deed?

A beneficiary deed has several advantages over the other methods of avoiding probate with respect to the transfer of title to real property.  The affidavit procedure is only available where the equity in the property is within the statutory limitation (currently $100,000.00), and it cannot be used until 6 months have passed from the date of death of the property owner.  If the property is an asset of a living trust, the successor trustee must interpret the provisions of the trust and then have a deed prepared transferring the property to the beneficiaries named in the trust.  When a beneficiary deed, properly prepared and recorded, combined with the subsequent recording of the death certificate for the grantor (property owner), the real property transfers automatically to the beneficiary named in the beneficiary deed.  The Beneficiary Deed then becomes the named beneficiary’s title to the property.  Beneficiary deeds may be changed at any time prior to the death of the grantor (property owner) and do not affect any tax or debt obligations of the beneficiary until the death of the grantor (property owner) since the beneficiary has no legal or equitable interest in the real property until the grantor (property owner) dies.  In short, the creditors of a beneficiary may not attempt to collect from the real property and there are no tax ramifications or other legal obligations to the beneficiary while the owner is alive.

How do I set up a deed myself?

The beneficiary deed is a very useful tool for transferring a person’s home or other real property upon a person’s death, but as with other deeds, it should be prepared by a professional.  A large part of business at Thompson Law Group, P.C. has been correcting titles to real property where deeds were incorrectly prepared.  Deeds must correctly reflect marital status, and contain an accurate legal description.  THE DOWNSIDE OF DIY: One of the most common defects in any transfer of real property via generic self-help forms is the failure to accurately state the legal description of the real property.  Further, the generic self-help forms do not include the mandatory disclosures required by Arizona law when a trust is involved which may make the title transfer unenforceable and void. 

What are they used for?

Beneficiary deed? What is it? Arizona law allows the owner of real property to convey all their interest in real property to a designated beneficiary to be effective only upon the owner’s death.  For many people, their home is their greatest asset, and they want to be able to transfer it to a certain person or persons in a simple, inexpensive means that avoids probate.  A beneficiary deed will accomplish this transfer without the need of a formal probate.  Put in link to Avoiding Probate – Transfer by Affidavit section of website here.

What do I need to consider beforehand?

A beneficiary deed is in some respects more complicated than other deeds, because it must correctly reflect the beneficiary (the person receiving the property after the decedent’s death) and in what capacity.  For example, if property is left to numerous children, will they obtain title as tenants in common?  What happens if one of the children dies before the grantor of the beneficiary deed?  Will grandchildren inherit if one of the children is deceased when the property is transferred?  For a husband and wife, do they understand that a beneficiary deed for property held in community property with right of survivorship can be revoked by the surviving spouse, giving the surviving spouse the power to change whom the property is ultimately transferred to upon death?  These and other questions should be answered before preparation of a beneficiary deed.  Just as in the case of a will or a living trust, the preparer of a beneficiary deed should make sure that it accurately reflects the desires of the person planning his or her estate.

How does Thompson Law Group handle beneficiary deeds?

Thompson Law Group, P.C. is committed to providing quality legal service at reasonable rates.  We generally provide our documentation preparation services at a flat rate so that the fees are certain.  If it is necessary to provide additional services, such as review additional documents, chain the title, etc., in order to prepare the necessary documents or cure title defects, we inform you of this expense prior to commencement of any work to avoid any confusion about the necessary work to protect your transaction. 

How do I avoid probate?

Here are thoughts on avoiding your property going into probate.

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Do I need to set up a beneficiary deed?

Wondering what needs to be considered before deciding on using a beneficiary deed?

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What about using a joint tenancy deed?

Here are considerations about using joint tenancy deeds.

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Should property be included in my trust?

Learn the ins and outs of including real property transfer in your trust.

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Can I avoid my property going through the probate process?

Many people want to explore ways to avoid probate. They are generally concerned with three things:

• The cost of probate

• The time involved in probating the assets (property) of an estate; and

• The fact that probate proceedings are public information.

There are several options for avoiding probate. These include:

» Transfer of property by affidavit;
» Titling property so that it transfers automatically without probate; and
» Living trusts.

Advance planning is necessary for the second or third options for avoiding probate.

Transfer of Property

» Arizona law allows for the transfer of property in small estates through an affidavit procedure.

The availability of the procedure, among other things, depends largely on the size of the estate involved. The affidavit procedure is available for both real and personal property. For personal property, the affidavit procedure is not available until thirty days after the death of the decedent and for real property the affidavit procedure is not available until 6 months after the death of the decedent. The affidavit transferring any type of property must strictly comply with certain statutory requirements. Thompson Law Group, P.C. has assisted many clients with the preparation of affidavits transferring property in small estates.

Titling Property

» The second option requires the persons planning their estate to title their property so that it will transfer automatically to a designated beneficiary. Examples of a non-probate transfer would be
(i) a bank account with a pay on death (POD) designation;
(ii) a designated beneficiary in a life insurance policy is a non-probate transfer;
(iii) a designation of a beneficiary in a retirement plan; and (iv) securities (such as stock) with a designated beneficiary.
Each of the foregoing examples will avoid probate in Arizona, provided the Arizona statutory requirements are satisfied. The transfer of the property to the designated beneficiary occurs automatically as a matter of law. If the deceased has a will or trust, property that is titled in the name of the deceased with a properly designated beneficiary will not be an asset of the will or trust. The only requirement for transfer of the property is the presentation of a death certificate. The transfer of real property automatically upon death may be accomplished in Arizona by the execution of a Beneficiary Deed.

Living Trusts

» The third option for avoiding probate is a living trust, which has become a particularly popular method for avoiding probate. A living trust will avoid probate if, and only if, the property is transferred into the living trust before death. In the case of real property, the property must be transferred by a deed naming the trustee of the trust as the grantee. A transfer into or out of the living trust is a more complicated deed and care needs to be given to make the requisite disclosures pursuant to Arizona law. >Thompson Law Group, P.C. has prepared many deeds for clients who need to transfer real property into or out of their trust. Living trusts are useful vehicles for not only avoiding probate, but also for providing estate tax planning in larger estates.


Thompson Law Group, P.C. is committed to providing quality legal service at reasonable rates. We generally provide our documentation preparation services at a flat rate so that the fees are certain. If it is necessary to provide additional services, such as review additional documents, chain the title, etc., in order to prepare the necessary documents or cure title defects, we inform you of this expense prior to commencement of any work to avoid any confusion about necessary work to protect your transaction.

 

Should I use a joint tenancy deed?

A word of caution is necessary with respect to the use of joint tenancy deeds. Many people have come to Thompson Law Group, P.C. asking for the preparation of joint tenancy deeds. Frequently, they want to add a child to the title of their real property (make the child a “joint tenant”), for the purpose of avoiding probate and transferring the property to their child upon their death. A joint tenancy deed will make the child an equal owner of the property. While it is true that a joint tenancy deed will avoid probate, it is not the only means of doing so, and may have serious adverse tax consequences as well as legal ramifications prior to the property owner’s death. If property is transferred by will or by beneficiary deed, upon the death of the owner, the heir will get what is called a “step-up in tax basis”. This may result in the elimination of part or all of any income tax on the sale of the property. The use of a joint tenancy deed will not provide a step-up in tax basis, and therefore may result in substantial income taxes on the subsequent sale of the property that could have been avoided.

In addition to possible adverse tax consequences, the use of a joint tenancy deed places another person on the title to the property, and therefore the original owner cannot transfer, sell, mortgage, or rent the property without the consent of the other joint tenant. The credit history of the joint tenant may be considered in obtaining financing. Perhaps of even greater concern is that outstanding judgments or tax liens against the joint tenant that are recorded in the county where the property is located will attach to the title to the property as soon as the joint tenant is added to the title. This means that the joint tenant’s creditors may use the property (sell it) to pay any judgments or liens of the joint tenant.

While joint tenancy deeds are appropriate in some circumstances, Thompson Law Group, P.C. makes sure that its customers are advised of the potential disadvantages of joint tenancy, and the other options for transferring property and avoiding probate that are available to its clients.

» Read more on beneficiary deeds here

 

Thompson Law Group, P.C. is committed to providing quality legal service at reasonable rates. We generally provide our documentation preparation services at a flat rate so that the fees are certain. If is necessary to provide additional services, such as review additional documents, chain the title, etc., in order to prepare the necessary documents or cure title defects, we inform clients of any additional expense prior to commencement of any work to avoid any confusion about fees or additional work to protect a client’s transaction and make it valid.


 

Should Property be Transferred Into My Trust?

There are benefits if it is.

Once your trust has been created, it is very important that you transfer all your assets into your trust, or your trust will have no effect. Many people that have formed a trust themselves using general self-help forms do not actually transfer their property into the trust. If property intended to be in trust is not properly transferred, then it is as if the trust never existed at all and will have no legal effect. While we do not provide any assurance as to the legal validity of your trust, which you would need to have determined by your estate planning attorney, we do assure you that any transfers in or out of your trust comply with Arizona law. Transfers into or out of a trust in Arizona are far more complicated than average transfers and require certain disclosures pursuant to Arizona statutes. Again, we make sure that the transfer will not only comply with Arizona law but will satisfy the title company’s requirements for future insurability of the property, as well.

Thompson Law Group, P.C. is committed to providing quality legal service at reasonable rates. We generally provide our documentation preparation services at a flat rate so that the fees are certain. If is necessary to provide additional services, such as review additional documents, chain the title, etc., in order to prepare the necessary documents or cure title defects, we will inform you of this expense prior to the commencement of any such work.