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
What should be a reasonable cost for the lady bird deed?
Hi crispino,
The cost for transferring property through a lady bird deed will vary in different states. You need to engage a lawyer in drafting the deed for you. This is important as the deed you'll be using need to suit your situation and requirements. Filing the deed with the county recorder's office involve only a nominal fee.
The cost for transferring property through a lady bird deed will vary in different states. You need to engage a lawyer in drafting the deed for you. This is important as the deed you'll be using need to suit your situation and requirements. Filing the deed with the county recorder's office involve only a nominal fee.
Jessica I have a home worth 1.3 million in San Francisco and would like to nego a life estate please call me at 415 261 5660
To vanessa,
"Jessica I have a home worth 1.3 million in San Francisco and would like to nego a life estate"
Who is on the title to the property? Are you the only one on the property title? Do you want to add someone to the title, while retaining a life estate on the property? If this is what you want, you need to contact a lawyer and get a lady bird deed drafted by him. This deed will help you transfer the property title without you having to give up the full ownership to the property. The life estate gives you the right to stay in the property as long as you live.
"Jessica I have a home worth 1.3 million in San Francisco and would like to nego a life estate"
Who is on the title to the property? Are you the only one on the property title? Do you want to add someone to the title, while retaining a life estate on the property? If this is what you want, you need to contact a lawyer and get a lady bird deed drafted by him. This deed will help you transfer the property title without you having to give up the full ownership to the property. The life estate gives you the right to stay in the property as long as you live.
Is Ladybird valid in Michigan? Our lawyer has suggested it!
Hi plumbob,
As far as I know, enhanced life estate deed or a lady bird deed is valid in the state of Michigan. You may find sample copies of lady bird deed used in Michigan. But the verbiage used on the deed varies from one particular situation to another. Thus, you should consult your attorney and get a lady bird deed drafted by him so it suits your particular situation.
As far as I know, enhanced life estate deed or a lady bird deed is valid in the state of Michigan. You may find sample copies of lady bird deed used in Michigan. But the verbiage used on the deed varies from one particular situation to another. Thus, you should consult your attorney and get a lady bird deed drafted by him so it suits your particular situation.
Can you send me a form, or do I have to have a lawyer to file one?
Can you send me a form, or do I have to have a lawyer to file one?
i was told that my faher in law could sell us our inhertance of land. and it would be in our name for refinancing.of course the the trailor on the land has a lein holder. we wish to refinance the trailor to pay off the lein ,have lower payments and lower interest rates.
can this be done? the lein holder doesnt finance mobile homes any more.
this lady bird sound interesting.
how do i find out about it in alabama? dobb7810 :?
can this be done? the lein holder doesnt finance mobile homes any more.
this lady bird sound interesting.
how do i find out about it in alabama? dobb7810 :?
Hi dobb,
Through a lady bird deed, your father in law can transfer the property ownership rights to you while retaining a life estate on the property. It means that he can live in the property till the time he is dead or the property is sold. He will also hold his rights to sell the property and he will not require any of the heir's permission in order to do so.
Once the title to the property is in your name, you can refinance the trailer. But like the current lien holder, many lenders do not finance used trailers. So, you'll need to search a lot before you can find a lender willing to help you refinance the trailer.
Through a lady bird deed, your father in law can transfer the property ownership rights to you while retaining a life estate on the property. It means that he can live in the property till the time he is dead or the property is sold. He will also hold his rights to sell the property and he will not require any of the heir's permission in order to do so.
Once the title to the property is in your name, you can refinance the trailer. But like the current lien holder, many lenders do not finance used trailers. So, you'll need to search a lot before you can find a lender willing to help you refinance the trailer.
mother regrets listing brother as beneficary in life estate deed. can she revoke him as sole beneficary?
To raagtownmom,
It will be very hard for your mother to revoke the deed. The ownership of the property has been transferred and your mother holds only the life estate rights i.e. she has the right to stay in the property as long as she is alive. She cannot remove your brother from the deed unless she can prove that there was undue influence on her while she signed the deed. But to prove that in the court will not be an easy task.
It will be very hard for your mother to revoke the deed. The ownership of the property has been transferred and your mother holds only the life estate rights i.e. she has the right to stay in the property as long as she is alive. She cannot remove your brother from the deed unless she can prove that there was undue influence on her while she signed the deed. But to prove that in the court will not be an easy task.
we have a ladybird deed on grandmothers land. she has alzheimer's disease and resides in a nursing home. we have an investment company wanting to buy our land. Is there a way we can sell without having to repay medicaid and lots of taxes?
My mother has been on medicaid for years, but she is now needing to go into a Nursing Home. Can she file for the Ladybird deed now and will it disqualify her for medicaid?
To Tex,
The Medicaid can come after your grandmother's land. The lady bird deed gives your grandmother the right to live in the property as long as she lives. The Medicaid will not come after the property till the time she is alive. The property will not be recovered even if she is in a nursing home as long as she has the intent to return to the property. But the Medicaid will come after the asset if you try and sell it off.
To smajic,
If she signs the lady bird deed it will not disqualify her for Medicaid. The Medicaid will not come after the asset even though she goes into a nursing home, provided she intends to return to the property. But if you intend to protect the property from Medicaid estate recovery, that might not be possible because Medicaid has a look back period of 5 years and any property transferred within the 5 year period will be subject to estate recovery.
The Medicaid can come after your grandmother's land. The lady bird deed gives your grandmother the right to live in the property as long as she lives. The Medicaid will not come after the property till the time she is alive. The property will not be recovered even if she is in a nursing home as long as she has the intent to return to the property. But the Medicaid will come after the asset if you try and sell it off.
To smajic,
If she signs the lady bird deed it will not disqualify her for Medicaid. The Medicaid will not come after the asset even though she goes into a nursing home, provided she intends to return to the property. But if you intend to protect the property from Medicaid estate recovery, that might not be possible because Medicaid has a look back period of 5 years and any property transferred within the 5 year period will be subject to estate recovery.