Colorado beneficiary deeds, from recording to sale
How a transfer on death deed passes a house without a will, and the one recording rule that decides whether it works. Also covered: changing or revoking one, and selling the house after the owner dies, debts included.
A Colorado beneficiary deed, also called a transfer on death deed, names who receives real estate when the owner dies, under C.R.S. 15-15-401 through 415. It must be recorded with the county clerk and recorder before the owner’s death. The owner keeps full control during life and can revoke it. A later will cannot override it.
One recorded page, and the house skips the will.
Amy and Jenny buy a fair number of houses from people who received them through a beneficiary deed. Usually it went smoothly: a parent recorded the deed years earlier. After the death, the house passed to the beneficiary without a probate case for the house itself. Sometimes it did not, because the deed was signed but never recorded, or a mortgage and other debts came with the house in ways nobody expected.
Colorado has allowed beneficiary deeds since 2004, when the legislature added a new part to the probate code. The law is short and specific, and the details in it decide whether the deed does its job. This guide walks through those details using the statute itself.
It is general information, not legal advice; confirm with a Colorado attorney before you sign or record a beneficiary deed, and before you rely on one after a death.
How a beneficiary deed works
A beneficiary deed is a deed that conveys an interest in real estate effective on the owner’s death. Under C.R.S. 15-15-404, it must contain the words conveys on death or transfers on death, or otherwise show that the transfer takes effect at death. The statute includes a sample form that many owners and attorneys use.
Nothing passes while the owner is alive. Under C.R.S. 15-15-402, the beneficiary has no right, title or interest in the property during the owner’s lifetime, and the owner keeps full power to sell or refinance the house without the beneficiary’s signature or consent, or even their knowledge. No payment is required to make it valid.
It is a plan, and plans can change.
The deed carries no title warranties unless the owner adds them; the statute gives it the same effect as a bargain and sale deed.
The recording rule that decides everything
A beneficiary deed works only if it is recorded with the clerk and recorder of the county where the property sits before the owner dies. The statute repeats this in C.R.S. 15-15-402 and 15-15-404, and the sample form opens with a printed caution that the deed must be recorded prior to the death of the grantor in order to be effective.
A signed deed found in a drawer after the funeral does nothing. The house then passes under the will, or under Colorado’s intestacy rules if there is no will, usually through probate.
If you are signing one, record it the same week.
Changing or revoking a beneficiary deed
The owner can change course at any time before death. Under C.R.S. 15-15-405, an owner revokes a beneficiary deed by recording a revocation that describes the property, or replaces it by recording a newer beneficiary deed, which cancels all earlier beneficiary designations for that property. The beneficiary does not need to agree or be told.
Among documents recorded before death, the most recently executed one controls, regardless of the order in which they were recorded. A will cannot change a valid beneficiary deed at all. Owners who update their will and forget the deed sometimes leave the house to someone they no longer intended, a mistake that shows up in the county records more often than it should.
What the beneficiary receives along with the house
The house comes with its debts. Under C.R.S. 15-15-407, the beneficiary takes title subject to every mortgage, deed of trust, lien, lease, contract and other interest affecting the property. That holds whether it was created before or after the deed was recorded. A reverse mortgage or a home equity line stays attached and must be paid when the house is sold or refinanced.
Get the payoff figures before anyone plans around the equity.
Estate creditors can reach it too. If the rest of the estate cannot pay the owner’s allowed debts and certain statutory allowances for the surviving spouse and other survivors, C.R.S. 15-15-103 makes the beneficiary liable to the estate for the shortfall, up to the value of what the beneficiary received. A creditor’s claim against the beneficiary is barred one year after the owner’s death under C.R.S. 15-15-411.
Medicaid is a separate question. The statutory form warns that signing a beneficiary deed may affect Medicaid eligibility, and the beneficiary’s interest is subject to the state’s recovery claims. An owner receiving or applying for long-term care benefits should see an estate planning attorney first.
Two more rules catch people off guard. If a joint tenant signs a beneficiary deed, it works only if that joint tenant is the last owner to die. And if one of several beneficiaries dies before the owner with no backup named, that share goes to the surviving beneficiaries; the form lets the owner name a successor beneficiary to avoid the question.
Read more: Selling a House With a Reverse Mortgage in Colorado →
After the owner dies, claiming and selling the house
Title vests in the beneficiary at the owner’s death. To show it in the county records, the beneficiary records proof of death, usually a death certificate, the same way a surviving joint tenant would under C.R.S. 15-15-413. Anyone with an unrecorded claim against the property then has four months after the death to record notice of it.
Record the death certificate first. Everything else waits on it.
The beneficiary can sell once title is clear on the record. A buyer or lender who pays value without notice of claims takes free of the estate’s rights under C.R.S. 15-15-410, though the beneficiary stays personally answerable to the estate for any share owed. Because estate creditors have up to a year, ask the title company early what it will need to insure the sale.
Taxes usually work in the beneficiary’s favor. Property received at death generally takes a basis equal to its fair market value on the date of death, so a prompt sale often produces little taxable gain.
Read more: Capital Gains Tax When You Sell a House in Colorado →
A recorded beneficiary deed or a house left by will.
A recorded beneficiary deed
- When it is set up Signed and recorded with the county during the owner’s life
- Probate for the house Usually not needed, though the form warns it may not avoid probate
- Who signs a sale The beneficiary, after recording proof of death
- Can a will change it No, only a recorded revocation or newer deed
A house left by will
- When it is set up Will signed during life, nothing recorded
- Probate for the house Needed when the house was in the owner’s name alone
- Who signs a sale The personal representative, with Letters from the court
- Can a will change it A later will replaces an earlier one
What to have on hand.
- A copy of the recorded beneficiary deed and any revocation
- A certified death certificate
- Recent mortgage, home equity or reverse mortgage statements
- Property tax and insurance details
- Anything you know about the owner’s other debts
Read it from the source.
- Colorado Session Laws 2004, chapter 217 (HB04-1048) the act that created Colorado beneficiary deeds, C.R.S. 15-15-401 to 415
- Colorado Revised Statutes the current official text of title 15, article 15, part 4
Questions homeowners ask us.
How do you create a beneficiary deed in Colorado?
The owner signs a deed that says the property conveys or transfers on death and names the beneficiary. The signature is notarized and the deed is recorded with the clerk and recorder of the county where the property sits. It must be recorded before the owner dies. The statute includes a sample form.
What is the best deed to avoid probate in Colorado?
For a single owner, a recorded beneficiary deed is the most common way to pass a house without probate for that house. Joint tenancy and a revocable trust are other routes. The statutory form warns it may not avoid probate entirely, for example when estate debts exceed other assets.
Does a transfer on death deed avoid capital gains tax?
It does not erase the tax, but it often shrinks it. Property received at death generally takes a basis equal to its value on the date of death, so a beneficiary who sells soon afterward usually has little gain. A house given during life keeps the giver’s basis instead.
Can a will override a beneficiary deed in Colorado?
A will cannot revoke or amend a valid recorded beneficiary deed under C.R.S. 15-15-405. Only a recorded revocation or a newer recorded beneficiary deed changes it. Either one must be recorded before the owner’s death.
What happens if the beneficiary dies before the owner?
The deed’s backup controls if the owner named a successor beneficiary. Without one, a deceased beneficiary’s share passes to the other named beneficiaries, and if there are none, the house passes under the will or intestacy.
Can the beneficiary sell the house right after the owner dies?
Once proof of death is recorded and title is clear, the beneficiary can sign as owner. Any mortgage or lien is paid at closing. Ask the title company early, because estate creditors can pursue the beneficiary for up to a year after the death.
Pages that usually come next.
Received a house by beneficiary deed? We can make an offer.
Tell us about the house and where things stand. Within 24 hours of that conversation you will have a written cash offer. You pay no fees or commissions, the house can stay as it is with no cleanout, and you pick the closing date.