Being named a beneficiary may come as a surprise, or it may be expected. Depending on your relationship to relatives and other property owners, being an heir comes with a few responsibilities.
If you’ve been named a beneficiary, here’s what you need to know to honor your predecessor’s wishes and protect your future property from any surprises.
What is a Beneficiary Deed?
Many times, property owners choose to name a beneficiary by executing a transfer-on-death (“TOD”) deed, or “beneficiary deed” in order to avoid probate. As its name suggests, a TOD deed can only be administered after the decedent is gone. If a will or revocable trust contradicts a beneficiary deed, the beneficiary deed stands.
How it Works
While your benefactor is still alive, he or she retains full ownership of the property. Unlike other means of conferring real property, a beneficiary deed can be changed by the owner anytime while still living. When the day comes that the courts step in to assess what belonged to your predecessor, property under a TOD deed is outside of probate, meaning it is not disclosed to the courts and never becomes public knowledge.
One benefit of this property transfer method (over, say, a will or revocable trust) is that if you’re struggling financially and unable to satisfy your current debts each month, no collections organization may identify your interest in the property while you wait to inherit.
What to Do
Being a good beneficiary means showing your benefactor that you respect the gift of his hard work and will honor his legacy. It may take a little organization and thought, but in the end, it’ll all be worth it.
Image Source: Flickr
Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.
CESI is NOT A LOAN COMPANY