Posted on: 29th Dec, 2006 12:07pm
Lady bird deed or Enhanced life estate deed is a legal document using which you can transfer property to your heirs while at the same time retaining a life estate along with the right to sell property in your lifetime. This implies that you will own the property till you die and if you'd like to sell, there's no need to notify your beneficiaries. Upon your death, your heirs or beneficiaries named on the deed will be able to take over the property without having to go through probate.
In which states is the deed applicable?
The enhanced life estate deed is acceptable in states like Florida, Texas, Ohio, California, and Kansas.
How does lady bird deed differ from life estate?
There are 2 ways in which an enhanced life estate differs from a regular life estate deed:
- Property sale: Unlike a ladybird deed which allows a grantor to sell property during his lifetime without the beneficiaries' consent, a regular life estate deed is one which doesn't allow you to sell without permission.
- Gift tax implications: A regular life estate allows the grantor to keep a life estate and transfer a remainder interest (estate that remains after grantor's death) to one who'll inherit property. The current owner has the right to occupy and use property. He is entitled to get all the money that can come from his property. But as per IRS rules, the grantor may have to pay gift taxes for transferring the remainder interest.
However, the grantor need not pay gift taxes if he uses a ladybird or enhanced life estate deed. This is so because the grantor has the unilateral right to cancel the remainder interest conveyed to the beneficiary.
How does one benefit from using lady bird deeds?
- Avoid probate: Unlike a Will that requires to be probated, a lady bird deed helps in conveying title without any probate at the time of the grantor's death.
- Protect from creditors: It protects the property from the beneficiaries' creditors during the grantor's lifetime. The creditors cannot place a lien on the property because the beneficiaries have no interest during the grantor's lifetime.
- No capital gains tax: The beneficiaries inherit property at a "stepped-up" basis, which is the value of the property on the day when the grantor passes away. If the beneficiary sells home, obviously there will be no capital gains and hence the grantee does not have to pay capital gains tax.
- Flexible rights: The grantor is legally entitled to sell or transfer property as a gift any time he wishes to do so. He may also take out a mortgage on the property or cancel the remainder interest.
Does ladybird deed affect Medicaid eligibility?
Using ladybird or enhanced life estate deed doesn't make you ineligible for Medicaid as long as you express your "intent to return" after being taken to nursing home. The "intent to return" can be expressed in the form of an affidavit or letter signed by you. Even if you do not express the "intent to return", your home may be considered as an exempt asset for Medicaid eligibility as long as your spouse or relative occupies it when you're not around. Check out if Ladybird deed causes Medicaid penalty.
Which is better - Ladybird deed or quitclaim?
Unlike ladybird deeds, a quitclaim with life estate does not allow the grantor to sell, mortgage or transfer property without the consent of the beneficiaries. The beneficiaries' creditors can easily place a lien on the property as the beneficiaries cannot claim the home as their homestead property. Moreover, if any beneficiary passes away or goes through divorce, his spouse can claim a share of interest in property. In some states, the quit claim or a life estate can even affect the validity of your homestead protection.
Using ladybird deeds make sense if you wish to convey property to your heirs directly without having to prepare a Will. In most cases, it may not affect your Medicaid eligibility. And, the deed offers maximum benefit to your beneficiaries when they take over your property.
Using ladybird deeds make sense if you wish to convey property to your heirs directly without having to prepare a Will. In most cases, it may not affect your Medicaid eligibility. And, the deed offers maximum benefit to your beneficiaries when they take over your property.
I have heard that lady bird deed can be used to avoid probate but not aware of the actual procedure for it. please help
Welcome gbaby.
I think you will still be able to retain homestead exemption on your Texas property even though you have signed on enhanced life estate deed.
Check out for more on this topic from a related community discussion at http://www.mortgagefit.com/life-estate/homestead-exemption.html .
Thanks.
I think you will still be able to retain homestead exemption on your Texas property even though you have signed on enhanced life estate deed.
Check out for more on this topic from a related community discussion at http://www.mortgagefit.com/life-estate/homestead-exemption.html .
Thanks.
Ladybird deed - any asset protection in CA. for the grantors of the parents in possession? I purchased one on online today but it won't open up and I need ASAP. Can Anyone help? Fax 415-332-4600
P.S. Is the homestead exception still good? What happens if I file BK?
P.S. Is the homestead exception still good? What happens if I file BK?
Hi Rich!
Welcome to the Forums!
Homestead exemption is done to protect the value of the homes of residents from property taxes, creditors as well as circumstances arising from the death of the homeowner spouse. The laws of bankruptcy differ from one country to another and thus the homestead exemption laws are also different. Certain exemptions are allowed as per the laws. You can consult an attorney to know about these exemptions.
Sussane
Welcome to the Forums!
Homestead exemption is done to protect the value of the homes of residents from property taxes, creditors as well as circumstances arising from the death of the homeowner spouse. The laws of bankruptcy differ from one country to another and thus the homestead exemption laws are also different. Certain exemptions are allowed as per the laws. You can consult an attorney to know about these exemptions.
Sussane
My mom's house was put into a ladybird deed in FL in 1/07. My mom has had 2 strokes since then and has 24 hr in home care. She is running out of money so we are selling her house and moving her in with my sister in NY, this sister is the beneficiary of the ladybird deed. My sister wants to take some of the money from the sale of the home and use it to buy her own home. Can she do this without jeopardizing my mom's eligibility for medicaid if she ever needs it?
Hi Anne!
Welcome to Forums!
The home may be considered as an exempt asset for Medicaid eligibility as long as one's spouse or relative live in that house when the original owner is not present. Now your mother has all the right to sell the property and I don't think that your mom's medicaid eligibility will be affected if your sister takes some money from the sale of the house.
Feel free to ask if you have further queries.
Sussane
Welcome to Forums!
The home may be considered as an exempt asset for Medicaid eligibility as long as one's spouse or relative live in that house when the original owner is not present. Now your mother has all the right to sell the property and I don't think that your mom's medicaid eligibility will be affected if your sister takes some money from the sale of the house.
Feel free to ask if you have further queries.
Sussane
Does and ELED protect the grantor from money judgments as well as the beneficiaries' creditors?
Hi aleksy!
Have you been through any judgment and do you need to pay the creditors? It will be easier for me to answer the query if you can clarify what you mean by ELED.
Thanks,
Jerry
Have you been through any judgment and do you need to pay the creditors? It will be easier for me to answer the query if you can clarify what you mean by ELED.
Thanks,
Jerry
MOM SIGNED A LADY BIRD DEED WHILE IN A NURSING HOME TO AVOID ESTATE RECOVERY. THE LADY BIRD DEED NAMES FOUR ADULT CHILDREN AS BENEFICIARES, HOWEVER, ONE OF THE SIBLINGS PASSED AWAY. CAN THE HOUSE BE SOLD WITH THE THREE REMAINING SIBLINGS OR DO THE CHILDREN OF THE DECEASED SIBLING HAVE TO BE INVOLVED IN THE SALE OF THE HOME? CAN HIS CHILDREN LEGALLY GIVE UP THEIR PART OF THE SALE OF THE HOME? CAN THE REMAINING SIBLINGS SIGN ON THE SALE OF THE HOUSE AND THEN GIVE OVER THE SHARE OF THE SELL OF THE HOUSE TO THE CHILDREN OF THE DECEASED???
THANKS,
LINDA
THANKS,
LINDA
Hi LINDA!
If your sibling has left any provision or has mentioned in his/her will that the heirs will be getting the property, then you will have to give them their share of property. However, if the deceased sibling has left nothing of that sort, then I don't think you will have to give the heirs anything.
Thanks.
If your sibling has left any provision or has mentioned in his/her will that the heirs will be getting the property, then you will have to give them their share of property. However, if the deceased sibling has left nothing of that sort, then I don't think you will have to give the heirs anything.
Thanks.
MY BROTHER HAD NO WILL. CAN THE REMAINING SIBLINGS SIGN OFF ON THE SALE OF THE HOUSE WITH A LADY BIRD DEED? WE ARE IN THE PROCESS OF SELLING THE HOUSE, BUT ONE OF THE CHILDREN OF THE DECEASED IS "dragging her feet" IN OBTAINING PAPERWORK WE NEED. THIS PROCRASTINATION COULD AFFECT THE TIMELY SALE OF THE HOUSE.
THANKS,
LINDA
THANKS,
LINDA
Hi LINDA!
If your brother has not left a will or anything in written, then I don't think his children will have any interest in the property. However, you may consult an attorney and check if there is anything you can do to resolve this quickly.
Thanks.
If your brother has not left a will or anything in written, then I don't think his children will have any interest in the property. However, you may consult an attorney and check if there is anything you can do to resolve this quickly.
Thanks.
do the decrease heir have any rights against a survive deed
Hi black beauty,
I am unable to understand your question. Can you be more specific and give some more details?
Thanks
I am unable to understand your question. Can you be more specific and give some more details?
Thanks
If I do this, can creditors still take the property from me, the grantor.
I did not give you enough info. If I use the above instrument to deed a homestead and surrounding property to my son, can bankruptcy still make claims on the above property? Our credit is fine but I am just thinking about the economy. Thank-you.