In 2004, the Colorado state government authorized that a transfer-on-death deed (or TOD deed) can transfer property rights to beneficiaries upon the deaths of the property owners. Known as a beneficiary deed in Colorado, this allows you to pass real estate property on to a selected individual or entity without the need for passing the property through probate courts.
However, these deeds are not for everyone. Couples need to understand that joint tenancy of a property can supersede a beneficiary deed, rendering it inoperable. TOD deeds can also affect Medicaid eligibility.
How to Obtain a Beneficiary Deed?
The state of Colorado provides a downloadable form that can be filled out and then signed by a notary. The form then needs to be properly filed.
Deeds that have been filed can later be revoked, so long as this act occurs before the deed owner’s death. The named beneficiaries can also be changed.
What Types of Property Can Be Transferred Via a TOD Deed?
Colorado law states that a TOD deed can be used to convey the interest of “real property.” In this definition, real property means real estate. By ‘interest’, the law includes any individual’s sole ownership of a real estate title, partial ownership, or certain lesser real estate interests.
A Colorado beneficiary deed can only transfer properties located within the state. Out-of-state property may potentially be eligible for transfer, but only under certain conditions established by laws in other states.
Is a Beneficiary Deed the Right Estate Planning Tool for You?
TOD deeds are non-probate transfers and do not need to go through the extra steps and processes that a typical will might, like probate court. These deeds are especially useful for estates of smaller sizes, as they may help keep the family home out of probate. However, if you leave the family home to all your surviving family members, this could result in conflict with indecision about what to do with the property as it is divided amongst everyone.
There are pros and cons to every estate planning tool available, and beneficiary deeds are no different. To better understand whether this is the right option for you and your beneficiaries, please speak with an experienced estate planning attorney in the state of Colorado. Every estate is unique in its way, and what’s best for one family may not be right for another. But rest assured, you do have options. A transfer-on-death deed may sound grim, but it could possibly be the best way to protect your family’s real estate for future generations. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.