Colorado Beneficiary Deed Form

What is a Colorado transfer-on-death (TOD) deed?

A transfer-on-death deed—also called TOD deed or beneficiary deed—is a written instrument that automatically transfers title to real estate to a designated beneficiary effective upon the property owner’s death.  In 2004, the Colorado Legislature authorized the use of TOD deeds to transfer Colorado real estate.

Colorado’s TOD deed laws are set forth in Chapter 15 of Title 15 of the Colorado Revised Statutes, beginning at Section 401.¹ The Colorado law uses the terms “beneficiary deed” and “grantee-beneficiary” when referring to TOD deeds and TOD beneficiaries, respectively.² For simplicity’s sake, this article uses “TOD deed” and “beneficiary,” except when directly quoting the Colorado law.

What is the purpose of a Colorado TOD deed?

The primary reason a property owner executes a Colorado TOD deed is to keep real estate from becoming part of the owner’s probate estate. Under Colorado law, a TOD deed is not considered a “testamentary disposition.”³ As a result, TOD deeds are considered non-probate transfers and do not need to satisfy all formalities required for valid Colorado wills.⁴

When key assets such as real estate bypass probate, a deceased owner’s estate is more straightforward and less expensive to administer. A TOD beneficiary can also obtain formal title to real estate sooner than if the property passed through probate.

After a property owner’s death, a TOD beneficiary confirms the transfer of title in the same manner as a joint tenant.⁵ The beneficiary records a certified copy of the owner’s death certificate and a supplementary affidavit with the land records of the county where the property is located.⁶ The affidavit includes a description of the real estate and states that the individual referenced in the death certificate is the same person listed in the relevant deed.⁷

What Types of Property Can Be Transferred Using a Colorado TOD Deed?

A property owner can use a Colorado TOD deed to “convey[] an interest in real property.”⁸ Real property means real estate, and an interest in real property can include a sole owner’s undivided title to a parcel, partial interests owned by joint owners, or lesser real estate interests recognized under Colorado law.⁹

Colorado TOD deeds can only transfer real estate located within the State of Colorado. Other provisions of Colorado law authorize transfer-on-death designations for other assets. For example, an owner of a Colorado-titled motor vehicle can execute a beneficiary designation form providing for transfer of title to a named beneficiary upon the vehicle owner’s death.¹⁰

What Is the Effect of a Colorado TOD Deed While the Owner Is Alive?

A Colorado TOD deed becomes “effective only upon the death of the owner.”¹¹ As long as the property owner remains living, the named beneficiary does not acquire any right, title, or other interest in the property.¹²

Because the property owner retains full title during life, the owner can sell, mortgage, or transfer the property for as long as he or she is alive. This feature distinguishes TOD deeds from deeds creating life estates. Life estate deeds grant a lifetime interest to a current owner and name a remainderman to take title after the current owner’s death. Because a remainderman’s future interest must be protected by the life estate holder, the current owner’s present rights in the property are more restricted than when a property owner records a TOD deed.¹³

During life, a property owner who has recorded a Colorado TOD deed also retains an absolute right to revoke or amend the TOD deed.¹⁴ However, a recorded TOD deed cannot be revoked or amended by a deceased owner’s will.¹⁵

A property owner revokes an existing Colorado TOD deed by executing and recording during life an instrument describing the real estate and stating that the TOD deed is revoked.¹⁶ As with an original TOD deed, revocation requires neither notice to the beneficiary nor the beneficiary’s consent.¹⁷

A recorded TOD deed is automatically revoked if the property owner executes and records a subsequent TOD deed relating to the same real estate.¹⁸ If more than one TOD deed is recorded for the same real estate, the date of execution—rather than the date of recording—determines which deed takes precedence.¹⁹

A TOD deed recorded by a Colorado resident can impact the property owner’s Medicaid eligibility. Under Colorado’s TOD statute, a property owner who records a Colorado TOD deed is ineligible for assistance under the Colorado Medical Assistance Act²⁰ if the state would be able to assert a Medicaid claim or lien against the property owner.²¹

What Is the Effect of a Colorado TOD Deed upon the Property Owner’s Death?

When the owner of real estate subject to a valid Colorado TOD deed dies, title to the real estate automatically vests with the TOD beneficiary.²² The TOD beneficiary formally confirms the transfer by recording in the county land records the owner’s death certificate and a survivorship affidavit.²³

Colorado TOD deeds provide no warranty of title unless the property owner expressly states otherwise within the TOD deed.²⁴ The beneficiary receives title subject to any mortgages, liens, sale contracts, purchase options, leases, or other encumbrances affecting the title as of the owner’s death.²⁵ Any claimant with an unrecorded interest in the real estate has four months from the owner’s death to record notice of the interest.²⁶

Colorado’s statutory TOD-deed form includes several notices and warnings in all capital letters. The final warning reads, “EXECUTION OF THIS BENEFICIARY DEED MAY NOT AVOID PROBATE.”²⁷ Because the purpose of a TOD deed is to avoid probate, this warning often leads to unnecessary confusion as to whether Colorado TOD deeds are a genuinely effective tool for bypassing probate.

Colorado law is clear that TOD deeds are non-testamentary, and real estate conveyed using a TOD deed automatically passes to the designated beneficiaries on the owner’s death.²⁸ Thus, a TOD property ordinarily bypasses probate. However—as the statutory warning suggests—there are a few scenarios in which real estate subject to a TOD deed could nonetheless end up involved in a probate case.

• The owner properly executes the TOD deed but fails to record it with the county clerk and recorder’s office.
• The beneficiary predeceases the owner—resulting in a lapsed transfer—and the TOD deed does not include other beneficiaries, a contingent beneficiary, or any other mechanism addressing this contingency.
• When the owner dies, the beneficiary disclaims the transfer or neglects to record the supplementary affidavit necessary to formally transfer title.
• The owner jointly owned the property as a joint tenant, and the other joint tenant outlives the executing owner, thereby becoming the sole owner of the property.²⁹ In this situation, the real estate eventually becomes part of the surviving owner’s probate estate, unless that owner makes other arrangements.
• The owner’s probate assets are insufficient to satisfy claims against the estate; and a creditor of the owner’s estate, an estate beneficiary, or the estate’s personal representative seeks to recover the property, or the value thereof, to satisfy an outstanding claim.³⁰

While these scenarios can all occur, they can be avoided in most cases through careful planning.  Further—even if real estate subject to a TOD deed successfully bypasses probate—probate may still be necessary for administration of the deceased owner’s other assets.

Can a Colorado TOD Deed Leave Property to Multiple Beneficiaries?

Yes, Colorado’s TOD law authorizes TOD deeds naming one or multiple beneficiaries.³¹ Colorado law assumes that—when real estate is co-owned—the owners are tenants in common with separate, fractional interests that can be independently transferred or devised by will.³² A property owner may specify within a TOD deed naming multiple beneficiaries that the beneficiaries will take title as joint tenants with right of survivorship.³³ Multiple TOD beneficiaries are assumed to receive equal shares unless the TOD deed expressly provides otherwise.³⁴

Can Joint Owners Sign a Colorado TOD Deed?

Yes, Colorado’s TOD statute contemplates execution of a TOD deed by joint owners of real estate.³⁵ The effect of one or more co-owners executing a TOD deed depends on the form of co-ownership in which the property is held.

By default, co-owners of Colorado real estate are assumed to be tenants in common.³⁶ If a tenant in common executes and records a TOD deed, that owner’s fractional interest in the property automatically transfers to the named beneficiary upon that owner’s death—regardless of whether the other owner is or is not still living.³⁷

By comparison, joint tenancy—a form of co-ownership only available to two or more natural persons—includes a right of survivorship and must be expressly specified within a property’s deed.³⁸ Due to the right of survivorship, when one joint tenant dies, title to the jointly owned property automatically vests with a surviving joint tenant.³⁹

The ultimate effect of a Colorado TOD deed signed by joint tenants depends upon whether one or all joint tenants executes the deed. When all joint tenants sign a TOD deed, title vests with a surviving owner upon the other owner’s death.⁴⁰ When the final surviving owner dies, the property interest transfers to the named TOD beneficiary.⁴¹

If only one joint tenant executes a TOD deed, the TOD deed only effectively transfers the real estate to the beneficiary if the owner who signed the TOD deed is the last joint tenant to die.⁴² If the TOD-deed-signing owner dies first, the other owner takes full title, and the TOD deed becomes ineffective.⁴³

Colorado no longer recognizes tenancy by the entirety—a joint ownership form similar to joint tenancy but limited to married spouses.  To the extent a tenancy by the entirety was created by a deed executed prior to July 1, 2006, the co-owners are treated as joint tenants with right of survivorship.⁴⁴

What Happens if the Beneficiary Named in Colorado TOD Deed Dies Before the Owner?

When a named beneficiary is unable to receive title under a TOD deed because he or she predeceased the property owner, the TOD transfer is said to lapse. Colorado’s TOD deed statute expressly excludes the application of anti-lapse statutes to transfers under TOD deeds.⁴⁵

In general, if a TOD deed lapses, the real estate reverts to the owner’s probate estate and is administered alongside other assets. Colorado’s TOD statute allows property owners to avoid lapse caused by a beneficiary’s early death by including contingency plans in TOD deeds.⁴⁶

Colorado authorizes property owners to name a “successor grantee-beneficiary” when executing a Colorado TOD deed.⁴⁷ A successor beneficiary is an individual who takes title to real estate upon the owner’s death if the primary TOD deed beneficiary predeceases the owner.⁴⁸

Another option for avoiding lapse is to name multiple beneficiaries. The default rule is that—if one of multiple TOD beneficiaries predeceases the property owner—the other beneficiaries receive the predeceased beneficiary’s share.⁴⁹ The Colorado TOD law, though, allows property owners to specify a different outcome when only one of multiple beneficiaries predeceases the owner.⁵⁰

Because avoiding probate is one of the most important reasons to record a TOD deed, addressing a potential lapsed transfer within the language of a TOD deed is usually a wise strategy.

Must the Owner Notify the Beneficiaries of the Colorado TOD Deed?

No, Colorado’s TOD deed law expressly states that notice to the beneficiary is not a prerequisite for an effective TOD deed.⁵¹ Likewise, a beneficiary does not need to sign or agree to a Colorado TOD deed.⁵² Upon the owner’s death, a TOD beneficiary can opt to disclaim the transfer.⁵³ When a beneficiary disclaims a transfer, he or she refuses to accept title to the property—causing the real estate to revert to the owner’s probate estate unless the TOD deed addressed that contingency.⁵⁴

Can a Colorado TOD Deed Be Used When the Property Is Mortgaged?

The general rule is that an outstanding mortgage does not prevent a property owner from recording a Colorado TOD deed.  Although due-on-sale provisions in most mortgage agreements allow mortgage holders to declare a loan immediately due and payable if the property is transferred, the federal Garn-St. Germain Depository Institutions Act⁵⁵ usually precludes enforcement of due-on-sale clauses in response to TOD deeds.

Under the federal statute, a mortgage creditor cannot trigger a due-on-sale clause in response to “a transfer to a relative resulting from the death of a borrower.”⁵⁶ Thus, Colorado TOD deeds naming a relative as beneficiary are protected by Garn-St. Germain.

Upon a property owner’s death, a Colorado TOD beneficiary receives title subject to any existing encumbrances.⁵⁷ While a mortgage does not typically prevent recordation of a TOD deed, the mortgage remains attached to the property after the transfer.

Must a Colorado TOD Deed Be Recorded?

Yes. To be effective, a Colorado TOD deed must be recorded “prior to the owner’s death.”⁵⁸ If a property owner executes—but does not record—a TOD deed during life, the intended transfer will fail, and the property becomes part of the owner’s probate estate. Colorado TOD deeds are recorded with the office of the clerk and recorder for the county in which the relevant real estate is located.⁵⁹

Can a Colorado TOD Deed be Signed By an Agent Under a Power of Attorney?

No.  Colorado’s TOD law requires a TOD deed to be “signed by the owner.”⁶⁰ Colorado law permits wills to be signed “in the testator’s name by some other individual in the testator’s conscious presence and by the testator’s direction,”⁶¹ but the TOD deed statute includes no similar provision allowing any other party to sign on a property owner’s behalf.

What are the Requirements for a Colorado TOD Deed?

A valid Colorado TOD deed must include all of the following items:

• The property owner’s signature and acknowledgement;⁶²
• Designation of a beneficiary;⁶³
• a description of the subject real-estate interest;⁶⁴ and
• Language indicating that the transfer takes effect upon the owner’s death—such as conveys on death or transfers on death.⁶⁵

The Colorado Legislature also suggests language for TOD deeds within the TOD deed statute.⁶⁶ Suggested items include

• The beneficiary’s address for identification purposes;
• A statement that the TOD deed is revocable, does not transfer ownership till the current owner’s death, and revokes any prior TOD deeds covering the same property; and
• A warning that recording a TOD deed could affect the property owner’s eligibility for Medicaid.⁶⁷

A Colorado TOD deed “need not be supported by consideration.”⁶⁸ That is, a TOD deed does not need to identify any value provided in exchange for the transfer.

How Can a Colorado TOD Deed Affect Eligibility for Medicaid?

Colorado’s TOD deed law has a fairly unique provision restricting Medicaid eligibility for property owners who record Colorado TOD deeds.⁶⁹ The statutory TOD deed form warns property owners that signing a TOD deed “MAY DISQUALIFY THE GRANTOR [i.e., the current owner] FROM BEING DETERMINED ELIGIBLE FOR, OR FROM RECEIVING, MEDICAID…”⁷⁰

To be Medicaid-eligible, an applicant cannot have countable assets valued above a certain threshold—$2,000 for solo applicants applying for nursing home care in Colorado.  Some assets, though—including an applicant’s principal residence—are considered exempt and do not count toward the asset limit.  When a Colorado property owner executes a TOD deed, the property is “considered a countable resource,” even if it would not otherwise be countable.⁷¹ That means that—for most practical purposes—anyone who records a Colorado TOD deed is disqualified for assistance under Colorado’s Medicaid program.⁷²

Fortunately, execution of a TOD deed does not permanently disqualify the property owner from Medicaid. Prior to applying, the owner will likely need to formally revoke the TOD deed so the property can be subject to a Medicaid lien.

Medicaid planning can be a tricky area.  For anyone who anticipates needing Medicaid assistance within the foreseeable future, it is wise to plan as far in advance as possible—ideally with professional advice.

1. C.R.S. §§ 15-15-401, et. seq.
2. C.R.S. § 15-15-401(1) and (3).
3. C.R.S. § 15-15-412.
4. C.R.S. § 15-15-412.
5. C.R.S. § 15-15-413.
6. C.R.S. § 38-31-102(1).
7. C.R.S. § 38-31-102(1).
8. C.R.S. § 15-15-401(1).
9. C.R.S. § 15-15-401(1); C.R.S. § 15-15-408; see generally C.R.S., Title 38, Art. 30: Titles and Interests.
10. C.R.S. § 42-6-110.5.
11. C.R.S. § 15-15-402(1).
12. C.R.S. § 15-15-402(1).
13. See, e.g., C.R.S. § 15-1-1201.
14. C.R.S. § 15-15-405.
15. C.R.S. § 15-15-405(4).
16. C.R.S. § 15-15-405(1).
17. C.R.S. § 15-15-405(1).
18. C.R.S. § 15-15-405(2).
19. C.R.S. § 15-15-405(3).
20. C.R.S. §§ 25.5-4-101, et. seq.
21. C.R.S. § 15-15-403.
22. C.R.S. § 15-15-407(1).
23. C.R.S. § 38-31-102(1).
24. C.R.S. § 15-15-404(2).
25. C.R.S. § 15-15-407(1).
26. C.R.S. § 15-15-407(3)(a).
27. C.R.S. § 15-15-404.
28. C.R.S. § 15-15-412.
29. See R.S. § 15-15-408.
30. See C.R.S. § 15-15-411.
31. C.R.S. § 15-15-401(3).
32. C.R.S. § 38-31-101(4).
33. See C.R.S. § 38-31-101(1).
34. See C.R.S. §§ 38-31-101(6); C.R.S. § 15-15-407(5).
35. C.R.S. § 15-15-408.
36. C.R.S. § 38-31-101(4).
37. C.R.S. § 38-30-101; C.R.S. § 15-15-404.
38. C.R.S. § 38-31-101(1).
39. C.R.S. § 38-31-101(1).
40. C.R.S. § 15-15-408.
41. C.R.S. § 15-15-408.
42. C.R.S. § 15-15-408.
43. C.R.S. § 15-15-408.
44. C.R.S. § 38-31-201.
45. C.R.S. § 15-15-407(5).
46. C.R.S. § 15-15-407(5).
47. C.R.S. § 15-15-401(5).
48. C.R.S. § 15-15-401(5).
49. C.R.S. § 15-15-407(5).
50. C.R.S. § 15-15-407(5) (“If one of multiple grantee-beneficiaries fails to survive the owner, and no provision for such contingency is made in the beneficiary deed…” (emphasis added).
51. C.R.S. § 15-15-402(2).
52. C.R.S. § 15-15-402(2).
53. C.R.S. § 15-15-402(2).
54. C.R.S. § 15-15-414.
55. 12 USC 1701j-3(d).
56. 12 USC 1701j-3(d)(5).
57. C.R.S. § 15-15-407(1).
58. Colo. Stat. § 15-15-402(1).
59. Colo. Stat. § 15-15-404(1).
60. C.R.S. § 15-15-402(1).
61. C.R.S. § 15-11-502(1)(b).
62. C.R.S. § 15-15-402(1), C.R.S. § 15-15-406, C.R.S. § 38-35-109(2), C.R.S. § 38-35-101.
63. C.R.S. § 15-15-402(1).
64. C.R..S. § 15-15-404(1); C.R.S. § 38-35-109(2).
65. C.R.S. § 15-15-401(1); C.R.S. § 15-15-404(1).
66. C.R.S. § 15-15-404(1).
67. C.R.S. § 15-15-404(1).
68. C.R.S. § 15-15-402(1).
69. C.R.S. § 15-15-403.
70. C.R.S. § 15-15-404.
71. C.R.S. § 15-15-403.
72. C.R.S. §§ 25.5-4-101, et. seq.