A beneficiary deed allows the owner of property -- also known as the grantor -- to pass property directly to a beneficiary upon the grantor's death. With this document, the property does not have to go through probate or subjected to gift taxes before the beneficiary can take legal title to it. Although a beneficiary deed can be quite helpful to those inheriting property, both grantor and beneficiary should be aware of the consequences of allowing a beneficiary deed to stand even when circumstances change.
To revoke a beneficiary deed, a grantor simply executes a revocation document. This is a statement that the deed is no longer in effect and any bequests of property by the terms of the deed are no longer valid. The revocation must be signed, dated and witnessed. You should file it in any court or recorder’s office where the initial beneficiary deed was filed. You should also send it by certified mail, return receipt requested, to the beneficiary named in the beneficiary deed.
Grounds for Revocation
The revocation of a beneficiary deed may come about through a grantor's change in plans for the estate or a beneficiary disclaiming the property. If a beneficiary disclaims a bequest of property and the beneficiary deed has not been revoked by the grantor, the property must go through probate court where the property will be dispersed in accordance with the state’s inheritance laws.
Ordinarily, a beneficiary deed that is not revoked will cause the property to transfer to the individual named as beneficiary. Grantors who wish to change the terms of a beneficiary deed by simply drawing up a new one, without legally revoking the original, risk protracted legal wrangling among the named beneficiaries, defeating the original purpose of a beneficiary deed: to avoid probate court.
Death of Beneficiary
If the beneficiary deed is not revoked and the beneficiary dies before the grantor does, the beneficiary’s heirs may claim the property. The laws governing this transfer vary by state. In Missouri, for example, the law requires the individuals making such a claim be the beneficiary’s direct descendants. If the grantor does not wish the property to pass to the beneficiary’s direct descendants, he may designate “no LDPS” after the beneficiary’s name in the deed, which effectively terminates the bequest upon the death of the beneficiary. LDPS is a legal acronym that stands for “lineal descendants per stirpes.”