In our practice, we often answer a number of questions about estate planning, and lately we have been talking about Lady Bird Deeds quite a bit. So, what exactly is a Lady Bird Deed?
Lady Bird Deeds are used to identify the ownership of real estate, and create what is known as an enhanced life estate. To help explain this form of ownership further, let's consider the hypothetical client, John Doe, and his only child, Jane Doe. John wants to ensure that his assets pass to Jane upon John's death, in the most cost-effective manner possible, but he wants to maintain ownership of his assets during his lifetime. John has already updated the beneficiary designations on his retirement accounts and life insurance, and has added Jane as a beneficiary of his bank accounts. John's only other asset is his home.
Using a Lady Bird Deed, John could retain ownership of his home during his lifetime, and retain the power to, among other things, sell, lease or mortgage the home during his lifetime. The Lady Bird Deed would provide that if John has not already conveyed the property to someone else during John's lifetime, upon John's death, the property is conveyed to Jane. Jane would then become the outright owner of the property upon John's death, without the necessity of probate.
As mentioned above, a Lady Bird Deed allows John to retain ownership and control over this home during John's lifetime. So, if John needed or wanted to transfer the home to someone else while John was living, he could do that without having to get Jane's approval or permission. John would be entitled to retain all of the proceeds from this sale or transfer.
Lady Bird Deeds accomplish a wide range of estate planning goals. These deeds can be used to transfer properties to a trust, or to individual(s) upon the death of the original owner. Spouses can jointly sign a Lady Bird Deed to identify what should happen to the property upon the death of the surviving spouse, and there can be more than one ultimate beneficiary identified in the Lady Bird Deed (although joint ownership by beneficiaries requires careful thought and planning). Lady Bird Deeds can also be very helpful in Medicaid planning and eligibility.
However, Lady Bird Deeds do not work for every situation. At Lumbertown Law, we're happy to discuss the pros and cons of using a Lady Bird Deed as part of your estate planning. Contact us today to learn more!