Trust & Estate Annual Legislative Update Outline
ANNUAL COLORADO LEGISLATIVE UPDATE
TRUST AND ESTATES
I. Beneficiary Deeds Statute (HB 04-1048)
A. HB 04-1048 adds Part 4 to Article 15 of the Colorado Probate Code regarding nonprobate transfers on death.
B. The statute sets forth a detailed procedure for transferring title to real estate at death without the necessity of probate administration.
C. The term “beneficiary deed” is defined in C.R.S. § 15-15-401(1) as “a deed, subject to revocation by the owner, which conveys an interest in real property and which contains language that the conveyance is to be effective upon the death of the owner and which may be in substantially the form described in [C.R.S.] Section 15-15-404.”
D. The grantor of a beneficiary deed is referred to in the statute as the “owner.” See C.R.S. § 15-15-401(4).
E. The statute defines the term “grantee-beneficiary” as “one or more persons or entities capable of holding title to real property designated in a beneficiary deed to receive an interest in real property upon the death of the owner.” C.R.S. § 15-15-401(3).
F. Under C.R.S. § 15-15-402(1), “title to an interest in real property may be transferred on the death of the owner by recording, prior to the owner’s death, a beneficiary deed signed by the owner of such interest, as grantor, designating a grantee-beneficiary of the interest.”
1. The transfer by a beneficiary deed is only effective on the death of the owner.
2. A beneficiary deed need not be supported by consideration.
3. Proof of death of the owner is established in the same manner as proving the death of a joint tenant under C.R.S. § 38-31-102. See C.R.S. § 15-15-413.
G. The joinder, signature, consent, or agreement of, or notice to, a grantee- beneficiary of a beneficiary deed prior to the death of the grantor is not required. See C.R.S. § 15-15-402(2).
H. During the lifetime of the owner, the grantee-beneficiary has no right, title, or interest in or to the property. See C.R.S. § 15-15-402(3).
I. A form of beneficiary deed is provided in C.R.S. § 15-15-404(1).
J. Unless the owner specifically provides otherwise in a beneficiary deed, a beneficiary deed is not deemed to create any warranties of title and the beneficiary deed has the same force and effect as a conveyance made using a bargain and sale deed. See C.R.S. § 15-15-404(2).
K. An owner may revoke a beneficiary deed by executing an instrument that describes the real property affected, that revokes the deed, and that is recorded prior to the death of the owner. See C.R.S. § 15-15-405(1). A form of revocation of beneficiary deed is provided in C.R.S. § 15-15-405(1).
L. The joinder, signature, consent, agreement of, or notice to, the grantee-beneficiary is not required for the revocation to be effective. See C.R.S. § 15-1-405(1).
M. A subsequent beneficiary deed revokes all prior grantee-beneficiary designations by the owner for the described real property in their entirety, even if the subsequent beneficiary deed fails to convey all of the owner’s interest in the described real property. See C.R.S. § 15-15-405(2).
N. The most recently executed beneficiary deed or revocation of beneficiary deed that has been recorded prior to the owner’s death controls regardless of the order of recording. See C.R.S. § 15-15-405(3).
O. A beneficiary deed may not be revoked, altered, or amended by the will of the owner. See C.R.S. § 15-15-405(4).
P. A grantee-beneficiary takes title to the owner’s interest in the real property subject to all conveyances, encumbrances, assignments, contracts, mortgages, liens, and other interests affecting title to the property, whether created before or after the recording of the beneficiary deed. See C.R.S. § 15-15-407(2).
Q. A person having an interest in the real property that is not recorded at the time of the death of the owner has four months after the death of the owner in which to record evidence of the interest or a notice of the interest in the property. See C.R.S. § 15-15-407(3)(a). If the person fails to record evidence of the interest or notice of the interest within four months after the death of the owner, the person is barred from asserting an interest in the property as against anyone not having notice of the interest. See C.R.S. § 15-15-407(3)(b).
R. The owner may designate a successor grantee-beneficiary to receive an interest in the property if the primary grantee-beneficiary does not survive the owner. See C.R.S. § 15-15-401(5).
S. The anti-lapse statute does not apply to beneficiary deeds. See C.R.S. § 15-15-407(5).
T. A joint tenant may execute and record a beneficiary deed. However, the beneficiary deed will only be effective if the joint tenant executing the deed is the last to die of all of the joint tenants of the property. See C.R.S. § 15-15-408.
U. If the other assets of the estate of the deceased owner are insufficient to pay all claims against the deceased owner’s estate and statutory allowances to the deceased owner’s surviving spouse and children, a transfer resulting from a beneficiary deed will be ineffective against the estate of a deceased owner to the extent necessary to pay the claims against the deceased owner’s estate and the statutory allowances. See C.R.S. § 15-15-409(1).
1. A grantee-beneficiary who receives property through a beneficiary deed is liable to account to the personal representative of the deceased owner’s estate for a proportionate share of the fair market value of the equity in the interest received to the extent necessary to discharge claims against the deceased owner’s estate and the statutory allowances. See C.R.S. § 15-15-409(2)(a).
2. A proceeding to assert the liability may not be commenced unless the surviving spouse, a creditor, or a child or a person acting for a child of the deceased owner has sent a written demand to the personal representative or has filed the demand with the court. See C.R.S. § 15-15-409(2)(b).
3. A proceeding to assert the liability must be commenced within one year after the death of the deceased owner. See id.
4. A sale of the property or loan with respect to the property by the grantee-beneficiary does not relieve the grantee-beneficiary of liability under C.R.S. § 15-15-409. See C.R.S. § 15-15-410(2).
V. Subject to the rights of claimants under C.R.S. § 15-15-407(2), if the property acquired by a grantee-beneficiary or a security interest in the property is acquired for value and without notice by a purchaser from, or lender to, a grantee-beneficiary, the purchaser or lender takes title free of rights of an interested person in the deceased owner’s estate. See C.R.S. § 15-15-410(1).
W. Unless otherwise barred, C.R.S. § 15-15-411 provides that the limitations on actions and proceedings against grantee-beneficiaries are as follows:
1. A claim by a creditor of the owner is barred at one year after the owner’s death.
2. Any other claimant or an heir or devisee is barred at the earlier of (a) three years after the owner’s death; or (b) one year after the recording of proof of death of the owner.
X. To prevent the circumvention of the estate recovery provisions of the Colorado Medical Assistance Act, the statute provides that, if the applicant or recipient has a beneficiary deed in effect, medical assistance will be denied to applicants for or recipients of medical assistance for which the Department of Health Care Policy and Financing could assert a claim for recovery against the estate. See C.R.S. § 15-15-403.
Y. The effective date of the Act is August 4, 2004. The provisions of the statute apply to beneficiary deeds executed by owners who die on or after the effective date. See C.R.S. § 15-15-415.
II. Statute Authorizing Coroner To Issue Death Certificate Where Death Presumed But Body Is Not Found (HB 04-1280)
A. The General Assembly adopted this statute in an effort assist families with collecting death benefits in the event of a mass casualty.
B. If the Governor declares a disaster emergency pursuant to C.R.S. § 24-32-2104 and it appears that a person has died as a result, but the remains have not been located or are unidentifiable, the coroner, sheriff, or district attorney for the county in which any part of the disaster occurred, the spouse, next of kin, or public administrator, or, thirty days after the disaster was declared, any other person, may apply to the coroner of the county asking that the coroner determine the cause, manner, and date of death of the alleged decedent. See C.R.S. § 15-10-106.5(1).
C. The application must contain the facts and circumstances concerning the disaster, the reasons for the belief that the alleged decedent perished, a statement that the alleged decedent’s remains have not been located or are unidentifiable, and the names and addresses of all persons known or believed to be heirs at law of the alleged decedent. See C.R.S. § 15-10-106.5(2)(a).
D. C.R.S. § 15-10-106.5(2)(b) provides that the application must also contain an affidavit in which the applicant states the following to the extent of the applicant’s personal knowledge, information, and belief:
1. the full name of the alleged decedent;
2. the alleged decedent’s residential address, including city, county, and zip code;
3. the alleged decedent’s date and place of birth;
4. the alleged decedent’s sex, race, ethnicity, and social security number;
5. the full names of the alleged decedent’s parents and the mother’s maiden name;
6. the applicant’s name, address, telephone number, and relationship to the alleged decedent;
7. the identification number of any missing person report filed concerning the alleged decedent;
8. the date and time of the applicant’s last contact with the alleged decedent and a description of that contact;
9. the basis for the belief that the alleged decedent was physically present at the time and place of the disaster;
10. a description of the efforts undertaken by the applicant, and efforts the applicant knows others to have undertaken, to locate or identify the alleged decedent;
11. whether the alleged decedent served in the armed forces of the United States and, if so, the branch and dates of service;
12. if the alleged decedent was employed, the name of the alleged decedent’s employer and the employer’s address and telephone number; and
13. the alleged decedent’s marital status, the name of the spouse, and wife’s maiden name, if applicable.
E. The applicant must pay an application fee of $25.00 when filing the application. See C.R.S. § 15-10-106.5(2)(c).
F. If the coroner finds sufficient evidence that a disaster occurred and that the alleged decedent named in the application may be presumed to have died, the coroner shall issue a certificate of death. See C.R.S. § 15-10-106.5(3).
G. If the coroner denies or fails to act within 30 days on an application that complies with the statute, the applicant may file a petition in the district court for the county in which any part of the disaster occurred or in the Denver Probate Court, if the disaster occurred in the City and County of Denver, for an expedited determination of death in accordance with the statute. See C.R.S. § 15-10-106.5(7). If the court determines that the alleged decedent died, a certified copy of the court’s order shall constitute sufficient evidence for the coroner to issue a death certificate. See C.R.S. § 15-10-106.5(4), (7).
H. The effective date of the Act is August 4, 2004. The provisions of the statute apply to applications and certificates of death filed on or after the effective date of the act.
III. Uniform Trust Code (SB 04-70)
A. Although the Colorado General Assembly did not adopt the Uniform Trust Code in 2004, the Uniform Trust Code may be offered again next year.
B. A copy of the Uniform Trust Code (SB 04-70) as offered this year may be downloaded from the Colorado General Assembly’s website (http://www.leg.state.co.us).
Louisa M. Ritsick
Moser and Silver LLP
600 South Cherry Street, Suite 715
Denver, Colorado 80246