(Please note: The 2019 Montana Legislature replaced Beneficiary Deeds with Transfer on Death Deeds. See blog posted November 19, 2020.)
Montana allows an owner of real property located within the state to avoid the probate process for such real property by creating and recording a special type of deed known as a Beneficiary Deed. A beneficiary deed transfers an owner’s interest in Montana real property, upon the death of the owner, to the beneficiaries named in the deed, thereby avoiding the probate process. To be effective, the deed must be properly recorded with the local county Clerk and Recorder office prior to the death of the owner.
A beneficiary deed does not modify the owner’s current interest in the real property and it does not transfer such interest to the named beneficiary until the owner’s death. A beneficiary deed may be created and recorded by the owner even though there may be a loan securing the real property and there is no requirement that the lender be notified of the deed. The deed may be amended by the grantor in the form of a new beneficiary deed being created and properly recorded. A beneficiary deed may be revoked by the grantor in the form of a revocation being created and properly recorded. By law, the deed will terminate upon the sale of the real property by the owner.
Because of possible issues relating to beneficiaries, such as disability, poor money management skills, divorce, and potential creditors, a beneficiary deed should be considered and only put into place as part of a well-thought-out estate plan. However, the beneficiary deed can play a primary role for simple and modest estates.