Estate planning can be complicated. It’s not quite as simple as writing down who you want to receive which assets. If you own one or more properties that you hope to pass down to beneficiaries, you might be interested in transfer deeds. Many types of transfer deeds are legal in Missouri. But if you want to pass property directly to beneficiaries after your death, a transfer-on-death (TOD) deed, also called a beneficiary deed, could be your best option.
Before you decide whether a TOD deed is the right tool for you, it’s helpful to first understand Missouri transfer-on-death deed statutes.
Overview of Missouri Transfer-on-Death Deeds
Missouri transfer-on-death deed laws allow property to transfer immediately to a beneficiary upon the owner’s death. Crucially, the property doesn’t have to go through probate before it goes to the beneficiary.
Probate is a legal process where the court oversees the validation of a will, the payment of a deceased person’s debts, and the distribution of their remaining assets to beneficiaries.
When deciding between a Missouri TOD deed and probate, many people would choose the TOD deed. Even when all goes smoothly, the probate process is typically long, expensive, and emotionally taxing. It’s also a matter of public record.
Missouri nonprobate transfer laws can make the aftermath of a loved one’s death easier on their family members. If you have property to pass down and are hoping to make the process as painless as possible, a beneficiary deed can be worth considering.
What Is a Missouri Beneficiary Deed (TOD Deed)?
Missouri Revised Statutes 461.025 outlines the specifics of beneficiary deeds or transfer-on-death deeds. The two names refer to the same legal document.
Here’s a look at how a beneficiary deed works:
- The owner records a deed in the same county where the property is located
- They retain full ownership and control of the property and may sell, lease, or refinance it
- They may also revoke the deed or change beneficiaries
- Upon the owner’s death, the property is transferred to the beneficiary
Beneficiary deeds aren’t always created by single property owners. Married couples may choose to record TOD deeds, too. In those cases, the property generally passes to the beneficiary after both spouses have died.
Legal Requirements and Drafting a Missouri TOD Deed
Missouri transfer-on-death deed statutes outline how a deed must be drafted to be legally valid. Some of the key Missouri TOD deed requirements to keep in mind include:
Property Owner Competency
The property owner must be mentally competent at the time the deed is created. If family members believe that the deed was created when the property owner wasn’t of sound mind, it could be invalidated by a court.
Owner and Beneficiary Information
To avoid confusion as to the identities of the owner and the beneficiaries, all parties’ legal names and addresses must be included on the deed.
Legal Description of the Property
Beneficiary deeds, as well as property deeds in general, must include a legal description of the relevant property. Usually, a legal description is highly detailed and technical, defining the precise location and boundaries of the land. There should be a legal description of the property on the existing property deed.
Clear Statement of Intent
Clarity is important when creating a TOD deed. The deed must specify that the transfer of the property to the beneficiary may only happen after the owner’s death.
Signing and Notarizing
If a TOD deed isn’t properly executed, it may be voided. Once a property owner has created the deed, they must sign it before a notary public.
Proper Filing
Finally, the deed must be recorded with the recorder of deeds in the county where the property is located. This should be done before the property owner’s death. Notably, the chosen beneficiary doesn’t have to sign or accept the deed when the owner is still alive.
The legal requirements for Missouri transfer-on-death deeds can be challenging to navigate. It’s important to consult an estate planning attorney if you need to create a new beneficiary deed.
Beneficiary Designation and Contingency Planning
Missouri beneficiary deed statutes allow you to transfer a property to a single beneficiary or multiple beneficiaries. They also allow you to name contingent beneficiaries in case the ones you chose can’t inherit the property. To stay within Missouri deed beneficiary designation laws and help your loved ones avoid confusion after your death, consider these tips as you name beneficiaries:
Beneficiaries Should Be Clearly Designated
When in doubt, being specific is always better. For example, you wouldn’t want to list “my children” as your beneficiaries. Instead, you should use their legal names.
Naming Contingent Beneficiaries Is Recommended
What happens if you pass away and your chosen beneficiary is unable to inherit? Naming one or more contingent, or backup, beneficiaries is wise.
Review and Update Beneficiaries as Needed
Many people view creating an estate plan as a one-time endeavor. However, circumstances can change. You should review your estate plan, including beneficiary deeds, at least once each year. You should also review it after a divorce, the birth of a child, or other major life event.
What if You Want to Revoke the Deed or Change Beneficiaries?
Recording a beneficiary deed in Missouri is a major step. But if you’re a property owner having second thoughts, you have the right to choose another beneficiary or simply revoke the deed.
The owner retains full ownership of the property even after creating a beneficiary deed. This means the property owner doesn’t need the current beneficiary’s consent to make the change.
When revoking a Missouri beneficiary deed, it’s important to do things the right way. Some property owners mistakenly believe that making a change to their last will and testament is enough to override the old beneficiary deed.
This is not true. If your will and the TOD deed on file with the county recorder of deeds don’t match up, the deed typically takes priority over the will. These are some of the most common ways property owners can change or revoke a beneficiary deed:
Recording a New Deed
If a property owner wants to change beneficiaries, they can record a new deed. This step automatically revokes the prior beneficiary deed.
Filing a Revocation Document
Suppose that the property owner needs to remove beneficiaries but doesn’t want to create another beneficiary deed. In that situation, they can file a formal revocation document. This legal document usually must be signed and notarized.
Getting Divorced
If the property owner’s spouse is the designated beneficiary, the deed is automatically revoked upon divorce.
Selling the Property
If the property owner sells the property after recording a TOD deed, the deed is automatically revoked upon the change of ownership.
How Transfer-on-Death Works After Death
Missouri real estate transfer-on-death statutes don’t just cover requirements for creating a TOD deed. They also outline how to transfer real estate after the property owner’s death. Technically, the property transfers immediately upon the owner’s death. However, it’s the beneficiary’s responsibility to record an Affidavit as to Death of Grantor in Missouri.
The affidavit must be filed with the County Recorder of Deeds in the county where the property is located. Once the beneficiary has done this, the property transfer will be properly documented. Keep in mind that when one or more beneficiaries assume possession of the property upon the owner’s death, they become responsible for any existing mortgages, liens, and other encumbrances on the property title.
Are There Any Situations That Can Void a TOD Deed?
In most cases, assuming your TOD deed has been correctly drafted and recorded, you shouldn’t have to worry about your property going to your chosen beneficiary. However, it’s still essential to understand how the Missouri beneficiary deed survival period applies to TOD deeds.
According to Missouri Revised Statutes 461.042, a beneficiary must survive the property owner by at least 120 hours to receive property through a non-probate transfer. You might wonder why this statute is in place. Its main purpose is to prevent double probate.
For example, imagine you and your beneficiary both pass away in the same car accident. If Missouri law didn’t include a deed survival period, the property would be transferred to your beneficiary’s estate and trigger another probate process.
If your beneficiary doesn’t survive you by at least 120 hours, the property subject to the TOD deed will most likely pass to a contingent beneficiary.
After your death, your loved ones may also challenge the beneficiary deed. These are some common challenges that may arise in court:
- The deed was the result of undue influence
- The deed was the result of fraud
- You lacked full mental capacity when you created the deed
Your TOD deed can also be revoked if you didn’t properly record it with the recorder of deeds before your death.
Advantages and Limitations of Missouri TOD Deeds
If you’re considering transferring your home or other real property to a loved one using a TOD deed, it’s important to first weigh the pros and cons of Missouri’s property transfer-at-death laws.
Here are some of the main advantages of creating a beneficiary deed:
- The deed allows the property to bypass the probate process
- You retain full control of the property until your death
- You have the flexibility to change or revoke the deed
- Creating a beneficiary deed is often far less expensive than setting up a trust
- After the owner passes, the transfer process is usually quick and easy
However, no estate planning strategy is all upside. Before you decide to create a TOD real estate deed, you should consider these potential drawbacks:
- In Missouri, Medicaid can recover what it paid for your care from the property, even after it passes to the intended beneficiary
- A beneficiary deed doesn’t name someone to manage the property if you become incapacitated
- The deed doesn’t protect the property from creditors
- If there are multiple beneficiaries, they must agree on major decisions like selling the property
It’s also wise to understand your other options before you commit. There are more available estate planning tools than many people realize, and you might ultimately decide that a different transfer process is a better fit for your family.
Thinking About Creating a Transfer-on-Death Deed?
Transfer-on-death deeds are a simple way for Missouri property owners to pass real estate on to loved ones after their death. If your deed contains errors or isn’t properly recorded, though, the designated grantee beneficiary might not receive the property right away, or they may not receive it at all.
That’s why it’s so important to work with an attorney who’s familiar with the Missouri transfer-on-death deed statute. The Law Office of David S. Schleiffarth, LLC, is committed to creating one-of-a-kind, comprehensive estate plans for each client. We’ll review transfer-on-death deeds and other estate planning tools with you to help you determine which ones best fit your goals.
If you have questions about the beneficiary deed statute in Missouri or you’re ready to get started on creating your plan, get in touch with us today.
