Arkansas law offers an estate planning option that is not available in all 50 states. If you want to leave your home to an adult child or someone else you care about, you can sign a beneficiary deed to transfer your property after your death.
A beneficiary deed is a simple tool to use. It designates one or more individuals to receive your home after you die. With this document, your home does not go through probate as it would if you used a will. However, beneficiary deeds can still lose effectiveness in certain situations.
Joint ownership can delay your deed
If you own your home with another person such as a spouse, you cannot count on your beneficiary deed to transfer your property to your beneficiary. Generally, joint ownership arrangements trump transfer-on-death arrangements since there is still a surviving owner in the picture.
In this situation, the beneficiary deed will not kick in until the other owner has also died. This is also considering whether or not the deed is still legally active by this time.
Your home may still go into probate
A beneficiary deed does not guarantee that your property will stay out of probate, not if your intended beneficiary dies before you do. In the event there is no surviving owner or assigned beneficiary, your home will become part of your estate. Fortunately, it is possible to avoid this problem by assigning a backup beneficiary.
Your beneficiary may inherit home debts
While your assigned beneficiary might receive your home without any trouble, remember that your heir could get all the problems attached to the property, especially financial ones. If you have not paid off your mortgage, your beneficiary will become responsible for the remaining balance. Liens and court judgments on your house can also be passed to the new owner.
Fortunately, it is possible to make other estate plans, such as establishing a trust, to pay off your remaining home expenses so your beneficiary does not become burdened by inheriting your home. Careful estate planning can do much to make a beneficiary deed realize your hopes for your family.