Preparing for the future and ways to transfer your property upon your death may not be the most enjoyable conversation to have, but for your family and loved ones, it is necessary to ensure that the transfer of your property happens smoothly and without the need for expensive court intervention. That is why, in this post, we will discuss Lady Bird Deeds, specifically what they are, what they do, how they are different from other traditional deeds, and how they may fit into your estate planning needs.
A Lady Bird Deed is a deed that allows a real estate owner to transfer a contingent ownership interest in a piece of property to specific and designated beneficiaries while still retaining an enhanced life estate. This means that a beneficiary’s claim to the property will not vest until the property owner dies.
These Lady Bird Deeds are also called an enhanced life estate deed and often require particular language to ensure that the deed actually qualifies as a Lady Bird Deed.
When an individual chooses to create a Lady Bird Deed, it provides them an opportunity to keep control of their property during their lifetime before passing the ownership of this property to a person of their choosing upon their death.
This deed is often used as a simple and straightforward estate plan for those individuals whose residence is the only asset or significant asset that may be probated upon death. More importantly, once the property’s owner dies, all the beneficiary has to do to receive the title to this property is to record the death certificate and file an affidavit related to the property’s transfer with the local assessor. However, if the beneficiary plans to use this property for their own residence, they may need to also apply for an exception regarding their property taxes.
In certain instances, this enhanced life estate deed offers some benefits over other traditional estate planning documents such as wills or trusts. For example, with a typical life estate deed, you would need to name an individual to inherit your property while still owning it. But this deed will have significant restrictions, such as you would not be able to sell or mortgage the property, and you may also be liable to the beneficiary you named if you significantly decrease the property’s value.
On the other hand, with a Lady Bird Deed, you can:
Since a Lady Bird Deed still needs to meet the requirements of other deeds, such as having:
It is in your best interest to reach out to an experienced estate planning attorney who can help you create this Lady Bird Deed by making sure your deed contains the required deed language and is in the proper format. In addition, they can also ensure that it includes everything you want to happen with your property.
In general, if your primary assets are in real estate, you want to minimize the cost of Estate Planning, and you qualify for or need Medicaid, then the Lady Bird Deed is something you should consider. However, the best way to know if this deed is right for you is to reach out to a skilled estate planning lawyer as soon as possible. These attorneys can go over this deed with you, figure out if it is the right decision for your individual needs, and help you understand the numerous benefits it can provide you and your family.
One of the more frequent complaints individuals have regarding an enhanced life estate deed is that it is not available in every state. Fortunately, today it is still allowed in North Carolina. In addition, if you are thinking about leaving the property to more than one individual, this type of deed may not be your best solution since it is not one of the more flexible options. Plus, if these individuals do not work well together, it can cause disagreements that can lead to a partition lawsuit. Finally, if you own more than just your home, a Lady Bird Deed may not be enough to keep your loved ones out of Probate Court.
That is why in certain situations, a Trust may be a better option, especially if you want to control when your beneficiaries receive the home or you want to protect your beneficiaries from creditors, bankruptcy, divorce, or substance abuse problems.
An enhanced life estate deed that is correctly prepared, signed, and recorded will replace the terms of the property owner’s Will, as long as the grantor has not exerted their retained right to reclaim ownership while they are living. However, if the Lady Bird Deed is canceled, then the Will will resume its role as the principal legal tool that will determine a property’s ownership. This means that when the property owner passes away, the transfer of the property title may require probate of the Will.