Caution: Writing Your Own Deed to Avoid Probate Can Lead to Unintended Consequences

One way to avoid probate of real estate after the owner dies is to hold the title to the property in joint names with rights of survivorship with children or other beneficiaries. This may be accomplished by adding the names of the children and certain legal terms to a new deed for the property and then recording it in the applicable public land records.

Some people believe that they do not need to work with an attorney to help them prepare and record the new deed. Instead, they think that a deed form can simply be downloaded from the internet or obtained from a book that can then be easily filled out and recorded. But deeds are in fact legal documents that must comply with state law in order to be valid. In addition, in most states, property will not pass to the other owners listed in a deed without probate unless certain specific legal terms are used in the deed. In one recent instance we saw a deed where the owner intended to transfer a partial interest in property to an additional tenant, but did not understand the terms “Grantor and “Grantee,” this invalidating the deed.

In sum, while this transaction may seem simple it may cause a “triple play of mistakes.” First adding additional tenants to the deed will subject the property to the claims of the new tenant’s creditors, second at the decedents death part of the step up in basis will be lost on appreciated property thus increasing future capital gains taxes upon later sale and third, if done with a quit claim deed may invalidate the owners title insurance policy.
How is a Defective Deed or an Invalid Deed Corrected?

If the problems with a defective deed or an invalid deed are discovered before the owner dies, then the problems can be addressed by preparing and recording a “corrective deed” in the applicable public land records. This should only be done with the assistance of an attorney.
Unfortunately, many times the problems with a defective deed or an invalid deed are not discovered until after the owner dies. If this is the case, then the problems cannot be fixed with a corrective deed since the deceased owner is unable to sign the corrective deed. Instead, the property will most likely need to be probated in order to fix the problems with the title. Aside from probate taking time and costing money for legal fees and court expenses, until the problems with the title are sorted out in probate court, heirs will not be able to sell the property. Or, worse yet, the property may be inherited by someone the owner had intended to disinherit when they prepared and recorded their own deed.
What Should You Do?

If you want to add your children or other beneficiaries to your deed in order to avoid probate, and you think you can save a few bucks by using a form you find on the internet or in a book, think again. Deeds are legal documents that have very specific requirements and are governed by different laws in each state (in other words, a deed that is valid in one state may not necessarily be valid in another.

If you want your home or other real estate to pass to your children or other beneficiaries without probate, then seek the advice of an attorney who is familiar with the probate and real estate laws of the state where your property is located.

Whether you are looking to minimize probate costs in the future, or need to administer a Colorado estate today, a knowledgeable attorney can help. We invite you to contact the experienced estate planning and probate attorneys at Davis Schilken at 303-670-9855 to arrange a consultation at one of our two locations in The Denver Tech Center and Golden, Colorado, to learn how we can help you.