What is a Lady Bird Deed?
- A "Lady Bird Deed" (properly known as an Enhanced Life Estate Deed) allows an owner of real property to name the person(s) that will get the property, when the owner dies. This is a simple estate planning tool that will allow the property owner to leave the real property to the beneficiary of their choice, without the need for probate. The benefit for doing this is the potential for avoiding Probate (for example, if all of the bank accounts, automobiles, etc. have beneficiaries listed, it was all too common that a need still existed for some form of Probate, just to transfer the ownership of the house, upon a person's death).
- Texas is one of only a few states that allows Lady Bird Deeds. Many more states, including Texas, allow the use of Transfer on Death Deeds, which are similar. Both deeds transfer ownership of property upon the death of the owner, and there are pros and cons for each of them. A Lady Bird Deed is often the better choice of the two.
- Other benefits of a Lady Bird Deed are that the owner continues to own the property for life, retains the right to claim the homestead tax exemption, and can sell or refinance the property, without requiring the beneficiaries to join in the transaction, or paying the beneficiary any of the proceeds. And, the Lady Bird Deed can be revoked at any time, prior to the death of the owner.
- Under current law, Medicaid Liens will not attach to the property, And, a Lady Bird Deed does not constitute a 'transfer" of the property, and does not violate Medicaid rules.
- If the property is owned by spouses, it is also advisable to include a provision that the property will be "right of survivorship" between the spouses, and then it will pass to the beneficiaries, after both spouses die (otherwise, it could be construed that half the property passes to the beneficiaries, when the first spouse dies).
- Contact us today to discuss the benefits of the Lady Bird Deed!