Beneficiary Deed Can Only be Used by a Natural Person

Question: My mother is the trustee of her revocable living trust (“RLT”), with me as the sole beneficiary.  The only asset in the RLT is my mother’s Sun City home.  My mother wants to simplify things and record a beneficiary deed to me for her home, which beneficiary deed will not be effective until her death.  Can my mother, as the trustee of her RLT, execute a beneficiary deed to me?

Answer:  No. The Arizona Court of Appeals has ruled that a beneficiary deed is only valid upon the death of a “natural person” who owned the real property.  238 Ariz. 144. Therefore, your mother’s home owned by her RLT cannot be transferred to you by beneficiary deed.  Your mother, as trustee of her RLT, can record a warranty deed for the home back to herself individually, and then execute and record a beneficiary deed for the home to you.  The recording of this beneficiary deed, if not later revoked by your mother in her lifetime, will automatically transfer the home to you upon your mother’s death.

Note:  A.R.S. § 33-405(A) provides for the recording of beneficiary deeds, and even has a form of a beneficiary deed. A.R.S. § 33-405(K). If your mother changes her mind, A.R.S. § 33-405(F) provides for the revocation of a beneficiary deed with a form. A.R.S. § 33‑405(L). The simplicity of recording a beneficiary deed, and the later recording of any revocation of the beneficiary deed, was designed to avoid costly legal fees for revisions to estate planning documents.

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