What is a Lady Bird Deed and how can I use it as part of my estate plan?
Enhanced Life Estate Deeds (aka Revocable Life Estate Deeds, aka Lady Bird Deeds) are a tool that can be used in estate planning to keep real property out of probate. Essentially, the maker of the deed gives a future interest in their property to a person or persons, but the maker retains the right to use the property for their lifetime. The maker also reserves the right to change or terminate the terms of the deed, sell the property, or mortgage the property. Because the maker of the deed retains full rights to the property and the right to terminate the deed, it is not considered a gift to the future interest holder. Use of this type of conveyance allows the maker to pass the property outside of probate and would not be subject to Medicaid reimbursement claims. Since this type of conveyance is not considered a gift, it can be used to plan for Medicaid to preserve the primary residence as an asset and can be made by a power of attorney. If spouses are making a conveyance simultaneously, we often include a right of survivorship before the conveyance of the future interest so the surviving spouse retains 100% ownership. However, this is determined on a case-by-case basis based on the outcome desired. Assuming the property is community property, they could elect to allow their community property to convey upon the first to pass leaving an undivided interest with the surviving spouse.
If you want help with estate planning or a Lady Bird Deed, contact the Law Office of Roy Neal Linnartz, PLLC at 830-625-9300.