Included in the Beneficiary Deed are the names of the property owner's "beneficiaries." The interest in real property conveyed by a Beneficiary Deed does not take effect until the death of the owner. When the owner passes away the interest stated in the Beneficiary Deed transfers automatically by law to the designated "beneficiaries" named in the deed.
As stated above, a Beneficiary Deed takes the property out of the probate process as ownership is transferred upon death and no longer part of the decedent's estate. A beneficiary deed typically avoids the cost and delay of probate because the property is not part of the probate estate of the deceased owner. However, the property is usually included in the deceased's estate for estate tax purposes. Gift taxes may not apply because the Beneficiary Deed is not a present transfer of property.
Beneficiary Deed v. Trust
A Beneficiary Deed is typically less complex and expensive than setting up a trust. However, a trust may still be desirable in certain situations, such as when the beneficiary is a minor, when multiple beneficiaries will own undivided interests in the property, or when property is owned as joint tenants with right of survivorship.
Beneficiary Deeds are more common among the various states than the Enhanced Life Estate Deed. State laws governing beneficiary deeds vary by state, so local laws should be consulted.