Estate planning often involves finding ways to transfer assets smoothly while minimizing costs,
delays, and tax burdens. For Arkansas property owners, beneficiary deeds are a highly effective
tool to achieve these goals. At Generations Legal Group, we assist families in protecting millions
of dollars in real estate from Medicaid each month and avoiding probate by strategically using
beneficiary deeds. Let’s explore how this tool works, its benefits, and how it can fit into a
comprehensive estate plan.
What Is a Beneficiary Deed?
A beneficiary deed, also known as a transfer-on-death deed, allows you to designate a
beneficiary who will inherit your real estate after your death. Unlike a traditional deed transfer, a
beneficiary deed takes effect only upon your death. This means you retain full control over the
property during your lifetime, including the ability to sell, mortgage, or manage it. Upon your
death, the property transfers automatically to your named beneficiary, bypassing probate.
Key Benefits of Beneficiary Deeds
1. Avoiding Probate
Probate is often a time-consuming, public and costly process. By using a beneficiary
deed, you ensure that the property transfers directly to your heirs without the need for
probate, saving both time and money for your loved ones.
2. Maintaining Control During Your Lifetime
A beneficiary deed allows you to retain full control over your property. You can revoke or
change the beneficiary designation at any time, providing flexibility as circumstances
change.
3. Step-Up in Basis for Tax Purposes
One of the most significant tax advantages of using a beneficiary deed is the step-up in
basis. When the property transfers upon your death, the beneficiary receives a step-up in
basis to the fair market value at the date of your death. This can significantly reduce or
even eliminate capital gains taxes if the property is later sold, making it a tax-efficient
way to pass on real estate.
For example, if you purchased a home for $100,000 and it’s worth $300,000 at the time of your
death, the beneficiary’s basis is stepped up to $300,000. If they sell it shortly thereafter for the
same amount, there would be no taxable gain.
4. Protecting Real Estate from Medicaid Estate Recovery
Medicaid estate recovery is a concern for families relying on Medicaid for long-term
care. Upon death, the state may attempt to recoup Medicaid costs from your estate,
including your real estate. A properly executed beneficiary deed can help shield your
property from recovery, ensuring it goes to your heirs.
At Generations Legal Group, we specialize in using beneficiary deeds to protect millions of
dollars in real estate from Medicaid estate recovery each month.
5. Cost-Effectiveness
Compared to setting up a trust, beneficiary deeds are often a simpler and more affordable
solution for transferring real estate while achieving many of the same benefits.
Potential Drawbacks to Consider
While beneficiary deeds are powerful, they do have limitations:
Real Estate Only: Beneficiary deeds apply only to real property. Other assets will
require additional planning tools like wills or trusts.
No Asset Protection for Beneficiaries: Once the property transfers, it becomes part of
the beneficiary’s estate and may be subject to their creditors or legal issues.
Potential for Family Conflict: If multiple beneficiaries are named, disputes may arise
regarding the use or management of the property.
These potential issues underscore the importance of consulting with an experienced elder law
attorney to ensure that a beneficiary deed fits seamlessly into your broader estate plan.
How Generations Legal Group Can Help
At Generations Legal Group, we understand the intricacies of estate planning in Arkansas.
Whether your goal is to avoid probate, protect assets from Medicaid, or minimize tax burdens for
your heirs, our team is here to help.
We’ll guide you through the process of creating a beneficiary deed, ensuring it’s properly
executed and recorded. We’ll also review your entire estate plan to identify other
strategies—such as trusts, wills, or powers of attorney—that can complement this tool and
provide comprehensive protection.
Take Control of Your Estate Planning Today
Beneficiary deeds are an efficient, cost-effective way to transfer real estate while avoiding
probate, reducing taxes, and protecting your legacy. With the right planning, you can ensure your
property passes to your loved ones with minimal complications.
