Beneficiaries of title deed

[azref2627]

In Arizona.

My sister wants to make to my daughter her beneficiary on her real estate title. She has a loan on it for $250k. Is my daughter responsible for the loan if my sister were to die? What liability does she have and does she sign the beneficiary deed? What benefits does it have other than to skip probate?

Thanks

 

[adjusterjack]

My sister wants to make to my daughter her beneficiary on her real estate title. She has a loan on it for $250k. Is my daughter responsible for the loan if my sister were to die?

She would be, if she wanted to keep the property. Otherwise she would have to sell it to pay off the mortgage or lose it in foreclosure.

What liability does she have

None at all while your sister is alive. The same liability as any other homeowner after your sister's death.

does she sign the beneficiary deed?

No. Only your sister does.

There is a format for it in the statute:

https://www.azleg.gov/ars/33/00405.htm

And you can get forms on the internet.

What benefits does it have other than to skip probate?

Avoiding probate is THE big benefit that the beneficiary deed was designed for. The property ownership automatically transfers to the beneficiary by law without the beneficiary having to take any "legal" steps.

It might interest you and your sister to know that the same thing can be done with motor vehicles:

https://apps.azdot.gov/files/mvd/mvd-forms-lib/96-0561.pdf

 

[azref2627]

The beneficiary isn't obligated to take the house though correct? If her only asset was the house and she didn't want it (maybe it was underwater or maybe it wasn't worth the hassle to sell for a small profit) she could simply refuse it without penalty to her I assume since she never signed any legal documents.

It would just default to her estate?

 

[adjusterjack]

Yes, your daughter can disclaim her inheritance and not have any responsibility. But that involves actually getting involved with the legal aspects of the estate.

If your daughter (or you) is afraid of bad "what ifs" happening I suggest you tell your sister not to name your daughter as beneficiary and make other arrangements for the disposition of the house.

On the other hand, your sister could live for many years, pay down the mortgage and leave your daughter a house with equity. Even if the house is under water, it might still be cheaper to continue with the mortgage if it's less than paying rent.

 

[zddoodah]

Is my daughter responsible for the loan if my sister were to die?

Death isn't a matter of "if," and the answer to your question is no. However, if your daughter takes title, the property will still be subject to any existing mortgage loans, so your daughter would need to pay the existing loan (or refinance) if she wants to avoid foreclosure.

does she sign the beneficiary deed?

No.

What benefits does it have other than to skip probate?

None.

The beneficiary isn't obligated to take the house though correct?

Correct. If your daughter isn't inclined to take the house when your sister dies, she ought to let her know that she should figure out something else to do with it.

 

[Zigner]

How old is your daughter?

 

[azref2627]

22