Arizona is one of a handful of states recognizing the concept of a "beneficiary deed" for real estate. The idea is simple—the owner of property can record a deed conveying the property to beneficiaries effective only on the owner’s death.

There are, of course, lots of opportunities for confusion in the actual use of beneficiary deeds. Property may be owned by two or more people, and they may not agree on who should receive it on their deaths. If one owner survives the other owners, he or she may change his or her mind about who should receive the property. It may not be clear what is supposed to happen if one or more of the beneficiaries dies before the property owner. If the owner changes his or her mind about using the beneficiary deed, or about who should be beneficiary, it may be difficult to make the change effectively and in time.

These and other problems make it important for property owners to understand and consider what they are trying to accomplish with the use of beneficiary deeds. Still, the very simplicity of the instrument is appealing, and many individuals will find beneficiary deeds a perfectly satisfactory alternative to setting up a living trust or preparing a more complicated—and perhaps more expensive—estate plan.

A recent Missouri case illustrates the kind of difficulty that can arise with the use of beneficiary deeds. Rollen H. Clarkson had three children, born of three different mothers. His oldest, Sue Burdette, was 52 when Mr. Clarkson died in 2000. His second child, Steven Clarkson, was 44. His youngest child, Ashley Rae Jolly, was 9. They had three different mothers, and only one of them—Steven Clarkson’s mother—had been married to Mr. Clarkson.

Before he died Mr. Clarkson knew that Ashley Jolly’s mother claimed that she was his child. He occasionally acknowledged that she was, but sometimes claimed that she was not. After his death paternity was formally established by the courts.

In order to avoid "formal legal proceedings" regarding his estate and paternity, Mr. Clarkson had signed the Missouri version of beneficiary deeds to property, naming Steven Clarkson as the recipient on his death. Ashley Jolly’s mother challenged those documents, claiming that Mr. Clarkson could not possibly have been competent to sign them—since he denied paternity of his youngest child, he could not know "the natural objects of his bounty" as required by the legal definition of capacity.

The Missouri Court of Appeals ultimately ruled that Mr. Clarkson’s deeds were valid and effective. They did not, however, work to avoid "formal legal proceedings." Jolly v. Clarkson, January 28, 2005.

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