I was poking around the internet and found a good synopsis of how beneficiary deeds operate. Although this is not a comprehensive summary, it gives the gist of how these deeds work. Please note that I am not the author of this passage, but am merely using it because I think it is a succinct overview.
A beneficiary deed is completed before the original owner passes away. Although the beneficiary deed is re-titled in the beneficiary’s name at this time, the original owner still has rights to the property. He or she is still legally allowed to live on the property and can refinance it. The original owner can also rent out rooms for living space or office space. Essentially, the original owner can do whatever he or she pleases with the property until the time of his or her death, without the permission of the beneficiary.
The legal aspects of beneficiary deeds vary from state to state. In Missouri, for example, the potential beneficiary is required to obtain spousal approval before he or she can be added to the beneficiary deed. The spouse must present written consent to the transfer of property. In addition, the spouse is entitled to ask for half of the property as payment for signing the transfer allowing the beneficiary deed to be completed.
While the original owner is still alive, he or she can re-direct the beneficiary deed to someone other than the original beneficiary. In order for the new beneficiary to be recognized, however, the original owner needs to obtain a recorded revocation before creating a new beneficiary deed.”
The original location for this passage is: