What is a quitclaim deed? What It Is?

Quitclaim deeds, also known as quick claims deeds, are used to transfer property without a formal sale. (A person “quits” his “claim” on the property). A quitclaim deed is not accompanied by a title search or insurance. This means that the transfer of property may be void if the original owner does not own the land.

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  Quitclaim deeds, because of their higher risks, are usually only used as part of an estate plan. You can, for example, use a deed of quitclaim to transfer property to another person, add your spouse as a co-owner, or remove him/her after divorce.
  
  
  The heir
  
  
  Or to be a
  
  
  Living trust
  
  
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  A quitclaim deed can be used to fix an error that has occurred in a title.
  

The pros and cons of the quitclaim deed

Create a quitclaim document

It is easier to set up a quitclaim deed than any other type of deed, including warranty deeds. How to create one:

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   Locate the specific quitclaim deed forms for your state and county.
   
   
   
   You can download the county form in some counties; for the majority, it can be requested from the clerk of your respective county.
   
   
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2. Complete the required information , which includes the names of the grantor, the grantee and a description about the property.

3. The document must be signed by both parties, in addition to a witness’ signature.

4. Register the transfer with the county clerk

Loopholes in Quitclaim Deed

Quitclaim Deeds are a way to take advantage of a loophole in estate planning. This allows people to bypass probate, which is the process that courts oversee for distributing an individual’s assets following their death. Probate can be expensive and time-consuming. Many people prefer to transfer property using alternative methods.

A quitclaim deed, or another means of transferring the property before death to a beneficiary, or to a living trust, can help to avoid probate.

Tax implications of a Quitclaim Deed

If you give away assets before your death, it can help reduce your estate size and reduce estate taxes. Federal estate taxes range from 18%-40% and are generally applicable to assets above $12.06 or $12.92 millions in 2022.

Warranty deed or quitclaim deed?

A quitclaim deed differs from a warranty deed in that they are used by different parties and offer different levels of protection to both the buyer and seller. In real estate transactions, such as when buying a house, warranty deeds can be used to protect the seller and buyer from contract breaches.