The Lady Bird Deed is a way to transfer land at death without probate. This specific form of life estate deed allows the owner to retain control of the property during his or her lifetime including the ability to sell it. Upon death, it is transferred to the new owners, preventing the state from being able to obtain control of the assets and avoiding the payment of the inventory fee through probate court.
Other transfer of death deeds do not provide the same benefits. Some may not allow the owner to retain rights to the property (or to sell the property) while alive. Others may require tax to be paid on the property since it could be deemed a gift or prevent eligibility for Medicaid due to the look-back period. By executing a Lady Bird deed, it wouldn’t be considered a transfer that you had to disclose to Medicaid because you keep complete control over the property.
Many situations call for a Ladybird deed. For instance, 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 the listed beneficiaries outside of the probate system.
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 quitclaim 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.