When it comes to protecting your property, many different options exist, and one of these more-commonly used choices is the Ladybird deed. However, while many individuals have heard of the term, not all understand what exactly it means and how it can be a benefit to their estate plans.
A ladybird deed is a type of warranty deed that gives the owner of the land or property the ability to transfer it to another person outside of probate while keeping a life estate in the property. Unlike a normal life estate, a Ladybird deed gives the owner of the home the power to keep control over the property during his or her lifetime. This power includes the right to use the property for profit or to sell it.
Many situations call for a Ladybird deed. For instance, if someone who is aging, is single or widowed, and has adult children, he or she may choose to use a Ladybird deed to transfer the property to the adult children upon his or her death. This deed is normally drawn up in addition to the actual Will document. As soon as the original owner of the property is deceased, the property then transfers to these listed beneficiaries outside of the probate system.
Many ask how the term “Ladybird deed” came to be. Rumor has it that President Lyndon Johnson conveyed real property to his wife, Lady Bird Johnson, through this type of deed. However, it is more commonly known that a Florida attorney, Jerome Ira Solkoff, used the name “Ladybird” in a description of a real property transaction in his elder law educational materials. The name just kind of took off, and it has now become common vernacular of the estate planning world.
One property transfer mistake that is often made is a parent adding his or her adult child to the property as a joint owner via a quit claim deed. The right idea is there, but the execution causes more problems that it was meant to avoid. If that adult child falls into some financial trouble or has any other legal matter come up, that asset becomes a liability. By being added as a joint owner, that property is considered a half-asset of the adult child. It is fair game in the event of a divorce, lawsuit or bankruptcy. A Ladybird deed avoids this issue by naming the child as a beneficiary to the property, not a current half-owner.
Another option is to have the home deeded to a revocable trust, making it an asset of the trust and not the individual owner. Upon the grantor’s death, the asset is dealt with under the terms of the trust itself and probate is still avoided. An estate planning attorney can meet with you to discuss what options are available and which ones work best for your specific life situation.
At Sullivan Law, we offer estate planning packages at a flat and reasonable fee. We also offer free consultations to discuss what your needs are, what you would like to do, and how that can be best accomplished. Everyone’s needs are different, and your wishes should be clearly listed and understood.
Call us at 248.917.1351 or email at asullivan@sullivanlawonline.com to schedule your free consultation today. We look forward to working with you!