Beneficiary Deeds

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Types of Deeds in Missouri…

Types of Deeds in Missouri…

Deed recording

UNDERSTANDING DEEDS

If you are the owner of a piece of property in Missouri, you acquired the property by a deed, which gives you title and ownership of the property.  Are there different kinds of deeds?  Yes there are.

General Warranty Deed – This type of deed guarantees a clear title to the buyer of property, who is warranting to the seller that they own the property, have the right to sell the property, that the property has no encumbrances other than the ones stated, that the seller will defend title against all claims by all persons, including persons claiming ownership prior to the seller’s ownership.  This is the traditional form of deed in a transaction between two unrelated parties and the strongest form of deed that a buyer can obtain because of all the guarantees, including clear title prior to even the current seller’s ownership of the property.  Regardless, a buyer should always do their due diligence with respect to the property and perform a title search.

Special Warranty Deed – Similar to a General Warranty Deed but not as strong, because here the seller only guarantees the property is free of encumbrances except as noted but only warrants to defend title against persons making claims under the seller’s ownership, not prior to seller’s ownership.

Quitclaim Deed – This type of deed does not contain a guarantee of clear title to the grantee (the person receiving title to the property).  Transfer of ownership with this type of deed is most common between family members or spouses.  For example, husband owns a piece of property prior to marrying wife and wants to transfer part ownership to wife.  In that case, husband would be the grantor (the person transferring title) and husband and wife would be the grantees.  These deeds are often mistakenly referred to as “quick claim”.

Beneficiary Deed – This is a deed which transfers ownership of a property after the owner passes away.  Conceptually, it is similar to a beneficiary designation on an insurance policy.  However, unlike other deeds, it must be recorded prior to the death of the owner.  If so, the property will avoid probate.  Only about half of the states allow these types of deeds and luckily Missouri is one of them.  It is specifically authorized by statute (RSMo. §461.025).  These deeds are commonly used in an estate planning, since they accomplish the goal of avoiding probate with your home.   These deeds do not affect title and become void if you sell the property (i.e. you’ll need a new beneficiary deed if you buy a new home).

Deed of Trust – A deed of trust is the recorded document by which a lender takes a security interest in a property.  It gives the lender the right to foreclose on the property if the borrower does not make payments on the loan.  It is not exactly a mortgage but very similar, although the term “mortgage” is commonly used in Missouri when people are actually referring to a deed of trust.

Deed of Release – A lender records this deed once a deed of trust has been paid in full by a borrower.  In fact, under Missouri law, a lender has 15 days to record a deed of release from the borrower paying off the loan and making a formal request for one.  (RsMo. §443.130)

Deeds are recorded at the Recorder of Deeds office.  In St. Charles County, the Recorder of Deeds is located in Room 388 of 201 North Second Street in St. Charles, across the street from the courthouse and jail.

Own Property in Missouri? Get A Beneficiary Deed

Own Property in Missouri? Get A Beneficiary Deed

OWN PROPERTY IN MISSOURI?  GET A BENEFICIARY DEED

If you are a landowner / homeowner in Missouri, part of getting your affairs in order should include having a beneficiary deed drafted and recorded for your property.  Unlike a quitclaim deed or warranty deed which evidences your current ownership of property, a beneficiary deed is not a present transfer of ownership.  This type of deed merely states that when you pass away, if you own that property that it should pass to the beneficiaries you name in the beneficiary deed.

The biggest advantage of recording a beneficiary deed is that doing so will ensure that your property avoids probate when you pass away.  This is because the recording of one of these types of deeds is what is referred to as a non-probate transfer.   Considering that the costs of probate for a $300,000 home will probably be around $8,000 – $10,000, having a beneficiary deed drafted and recorded for roughly $250 (our fee at Legacy Law Center) is a terrific investment.

In a beneficiary deed, you are the grantor, the person granting the property to your beneficiary, who is the grantee.  If you have a living trust, your beneficiary might be your living trust rather than named individuals.  You will need to discuss this with the attorney that drafts the beneficiary deed for you, although in many cases our firm drafts beneficiary deeds as part of an estate plan that includes a living trust for a couple or an individual, so that discussion would be part of the larger discussion about all aspects of your estate plan.

The beneficiary deed is also an easy solution for those who live in one state but own property in Missouri.  We have drafted and recorded many beneficiary deeds for out of state clients who just wanted to ensure that their Missouri property will be protected when they are gone.

Beneficiary deeds are authorized specifically by Missouri law and Missouri is one of about twenty or so states in America that have them.  Keep in mind a few things about them, however.  First, unlike other deeds (such as a quitclaim deed) that can be recorded after your death, a beneficiary deed must be recorded before you pass away.  Another important thing to know is that a beneficiary deed can be revoked and a new beneficiary deed can be recorded in place of the old one.  So, for example, if you originally wanted to give your property to one of your children but changed your mind, you can record a new version granting the property to all of your children, so long as the document is recorded prior to your passing away.

A few other things to consider:  Whether you have a mortgage on the property or own it free and clear is irrelevant.  The beneficiary deed will not affect your ability to sell a property and if you do sell the property, the deed is obviously void.  Of course, if you sell one property and buy another, you’ll need to record a new document for the new property.

Here is the link to the statute authorizing beneficiary deeds: http://www.moga.mo.gov/mostatutes/stathtml/46100000251.html

Understanding types of property ownership in Missouri

Understanding types of property ownership in Missouri

UNDERSTANDING TYPES OF PROPERTY OWNERSHIP IN MISSOURI

In my last article, I discussed the different types of deeds which can convey real property.  This article focuses on the different types of property ownership in Missouri.

Property can be owned solely by one person or organization, or ownership can be shared by more than one party. Sole ownership is obviously the simplest, most straightforward type of possession. The sole owner has the rights to the property within limitations of the laws (such as vehicle registration or zoning), and there is rarely any question raised when these rights are exercised.

One form of co-ownership is tenancy in common where each party or tenant has separate and distinct property interests.  Each tenant in common has a fractional interest in the property.  The amount of the fractional interest is the percentage of the total value of the property that the individual paid, or received as an inheritance or gift, when the tenancy was created. For example, if property was purchased for $50,000 and one of two tenants in common paid $20,000 in cash and mortgage payments, then his or her fractional interest is 40 percent. Each tenant in common is entitled to the income that his or her fraction of the property generates. Tenants in common owners may dispose of their interest as they wish. When one tenant dies, the interest of a tenant in common passes according to their will (or the law of intestate succession if there is no will). The property does not automatically revert to the survivors.

Another form of co-ownership is joint tenancy with right of survivorship.  This is created by a deed if the property is land.  The joint tenants own the same interests arising from the same conveyance of title such that each has an undivided or undesignated interest in the jointly owned property.  Each has a right to use the property and a right to any income generated by the property as well. When one joint tenant dies, the survivor automatically acquires full ownership of the property. If more than two people are joint tenants with right of survivorship, the remaining individuals share the property; no third party will take the decedent’s share.

This ownership arrangement acts like a will substitute because the property will automatically belong to the survivors, avoiding probate.  A joint tenancy that can be used only by a husband and wife and only with real estate is a tenancy by the entirety with right of survivorshipLike other joint tenancy property, upon death of the first spouse, property in tenancy by the entirety is passed on to the surviving spouse. Tenancy by the entirety property cannot be severed without consent of both the husband and wife.  Divorce severs the tenancy, however.

Understanding deeds in Missouri…

Understanding deeds in Missouri…

UNDERSTANDING DEEDS

If you are the owner of a piece of property, you acquired the property by a deed, which gives you title and ownership of the property.  Are there different kinds of deeds?  Yes there are.

General Warranty Deed – This type of deed guarantees a clear title to the buyer of property, who is warranting to the seller that they own the property, have the right to sell the property, that the property has no encumbrances other than the ones stated, that the seller will defend title against all claims by all persons, including persons claiming ownership prior to the seller’s ownership.  This is the traditional form of deed in a transaction between two unrelated parties and the strongest form of deed that a buyer can obtain because of all the guarantees, including clear title prior to even the current seller’s ownership of the property.  Regardless, a buyer should always do their due diligence with respect to the property and perform a title search.

Special Warranty Deed – Similar to a General Warranty Deed but not as strong, because here the seller only guarantees the property is free of encumbrances except as noted but only warrants to defend title against persons making claims under the seller’s ownership, not prior to seller’s ownership.

Quitclaim Deed – This type of deed does not contain a guarantee of clear title to the grantee (the person receiving title to the property).  Transfer of ownership with this type of deed is most common between family members or spouses.  For example, husband owns a piece of property prior to marrying wife and wants to transfer part ownership to wife.  In that case, husband would be the grantor (the person transferring title) and husband and wife would be the grantees.  These deeds are often mistakenly referred to as “quick claim”.

Beneficiary Deed – This is a deed which transfers ownership of a property after the owner passes away.  Conceptually, it is similar to a beneficiary designation on an insurance policy.  However, unlike other deeds, it must be recorded prior to the death of the owner.  If so, the property will avoid probate.  Only about half of the states allow these types of deeds and luckily Missouri is one of them.  It is specifically authorized by statute (RSMo. §461.025).  These deeds are commonly used in an estate planning, since they accomplish the goal of avoiding probate with your home.   These deeds do not affect title and become void if you sell the property (i.e. you’ll need a new beneficiary deed if you buy a new home).

Deed of Trust – A deed of trust is the recorded document by which a lender takes a security interest in a property.  It gives the lender the right to foreclose on the property if the borrower does not make payments on the loan.  It is not exactly a mortgage but very similar, although the term “mortgage” is commonly used in Missouri when people are actually referring to a deed of trust.

Deed of Release – A lender records this deed once a deed of trust has been paid in full by a borrower.  In fact, under Missouri law, a lender has 15 days to record a deed of release from the borrower paying off the loan and making a formal request for one.  (RsMo. §443.130)

Deeds are recorded at the Recorder of Deeds office.  In St. Charles County, the Recorder of Deeds is located in Room 388 of 201 North Second Street in St. Charles, across the street from the courthouse and jail.

 

 

 

FREE Missouri Estate Planning Guide

FREE Missouri Estate Planning Guide

Free Missouri Estate Planning Guide

CLICK HERE FOR YOUR FREE MISSOURI ESTATE PLANNING GUIDE:  Estate Planning Guide