Vulnerability to claims by beneficiary’s creditorsĪs the creditors of the grantor may have increased opportunity to attach the real estate being transferred by way of beneficiary deed, so also might the creditors of the beneficiary be able to attack the property upon the death of the grantor.įor example, in the event a beneficiary is going through a divorce, bankruptcy, insolvency or has a large judgment against them, the related creditors in those actions may be able to legally attach and take the value of such real property. On a related note, in 2019 the Nevada legislature updated NRS 164.025 to require that such notice to creditors of a decedent owning an interest in a trust publish such notice to both creditors of the trust AND the settlor of the trust, whereas before, only notice to the creditors of the trust was required. This is four and one-half times faster than if a deed upon death is used. With transfers of property to trusts, on the other hand, this creditor claim period may be shortened to just 120 days, upon publishing of the appropriate notice to creditors. The executor/personal representative of the decedent’s estate can of course petition the probate court for this 18-month creditor period to be shortened, however, it would require the opening of probate, which is obviously negates the major reason for trying to use a beneficiary deed in the first place! The reason title insurance may not be obtainable in Nevada until 18 months following the grantor’s death, as stated above in #2, is that NRS 111.689 allows the creditors of the grantor’s probate estate to enforce their liabilities against a property transferred pursuant to a deed upon death for up to 18 months following the grantor’s death. Vulnerability to claims by grantor’s creditors It is possible that probate can be done to rectify this situation, but this, of course, defeats the purpose of the transfer on death deed which was to avoid probate. If, in such case, the beneficiary desires to sell the property soon after the grantor’s death, especially to a non-cash buyer, the new buyer may have problems obtaining title insurance, and, therefore, may have problems borrowing money to buy the property, seeing how most mortgage companies require title insurance before making a loan. This is because under Nevada law creditors of the decedent have eighteen months to file claims against the estate and would have priority claim on any assets belonging to the estate, including of course, the real property subject to a beneficiary deed. Many title insurance companies are refusing to issue a title insurance policy until the new owner has owned the property for at least eighteen (18) months after the grantor’s death. Unless a grantor uses the correct language, as required by the Deed upon Death Act, the transfer will not be effective. Transfer on death forms or deed upon death formsįorms for beneficiary deeds are readily available online but may prove unreliable. Some of those problems are as follows: 1. While Deeds upon Death may initially appear to be less expensive than establishing and using a revocable trust, there are many downsides which ought to be considered prior to going down the Transfer on Death route. It should be noted that Transfer on Death Deeds do not “show up” on the Clark County Assessor’s website until someone files an Affidavit of Death (upon the passing of the grantor), but such instruments do “show up” on the Clark County Recorder’s website. To be effective these Beneficiary Deeds must be recorded prior to the death of the grantor. These deeds are revocable, so that if the grantor changes her mind she may revoke the conveyance. In pertinent part, the Deed on Death Act allows for the recordation of a deed which will effectively transfer the real property to the named beneficiary upon the death of the grantor. In 2011, the State of Nevada passed the Uniform Real Property Transfer on Death Act, which can be found at NRS 111.655 to 111.699 (the “Deed upon Death Act”). While using a joint tenancy or other titling options with rights of survivorship is sometimes to referred to as the “Poor Man’s Estate Plan” or “Home Spun Estate Planning”, this article will focus on the particulars and problems with using beneficiary deeds in Las Vegas, Henderson, Clark County and other parts of the State of Nevada.
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