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
Is it possible to have a Ladybird Deed for the Grantor and Grantee as Texas residents but the property to be in Florida? Or for the Grantor and property in Florida but the Grantee to be a resident of Texas? Can there be two Grantees with shared Grantee status?
Hi!
Welcome to forums!
To sherri,
Ladybird deed has nothing to do with the mortgage. You can use it to transfer property from one person to another. As far as I know, ladybird deed is acceptable in states like Florida, Texas, Ohio, California, and Kansas. You can contact a New York based attorney and take his opinion in this matter.
To Hal,
If the property is located in Florida, then ladybird deed should be the one accepted in Florida. Two grantees can transfer property to someone else using a ladybird deed.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
To sherri,
Ladybird deed has nothing to do with the mortgage. You can use it to transfer property from one person to another. As far as I know, ladybird deed is acceptable in states like Florida, Texas, Ohio, California, and Kansas. You can contact a New York based attorney and take his opinion in this matter.
To Hal,
If the property is located in Florida, then ladybird deed should be the one accepted in Florida. Two grantees can transfer property to someone else using a ladybird deed.
Feel free to ask if you've further queries.
Sussane
Sussane- Thanks for the reply. I actually missed the second part of my question. I was wondering of there can be two recipients that share the property when the Grantor dies? And is the distribution of value between the Grantees established in the deed?
Hi Hal,
There can be two recipients of the same property after the grantor dies. The grantor can transfer the property to two heirs before his/her death. The grantor can mention the distribution of values in the property deed.
Thanks
There can be two recipients of the same property after the grantor dies. The grantor can transfer the property to two heirs before his/her death. The grantor can mention the distribution of values in the property deed.
Thanks
does arkansas except the lady bird deed.
Hi jaggs!
Welcome to forums!
As far as I know, the ladybird deed is not considered valid in Arkansas. However, I would suggest you to contact a real estate attorney based in Arkansas and take his opinion in this matter.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As far as I know, the ladybird deed is not considered valid in Arkansas. However, I would suggest you to contact a real estate attorney based in Arkansas and take his opinion in this matter.
Feel free to ask if you've further queries.
Sussane
It looks like they require 2 witness signatures, can the grantee or grantee's wife sign or does it have to be someone completely different.
Hi Darcey!
Welcome to forums!
As far as I know, any person who has attained the age of 18 years of age can sign as a witness. However, some states may have different rules concerning witnesses. So, you should check out your state laws in this regard. Also, it should be remembered that if a person is benefiting from anything in the concerned document, then he or she can't be a witness to that document.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As far as I know, any person who has attained the age of 18 years of age can sign as a witness. However, some states may have different rules concerning witnesses. So, you should check out your state laws in this regard. Also, it should be remembered that if a person is benefiting from anything in the concerned document, then he or she can't be a witness to that document.
Feel free to ask if you've further queries.
Sussane
Is this application applicable in New Hampshire??
Hi jcrowe,
As far as I know, a ladybird deed is applicable in Florida, Texas, Ohio, California, and Kansas. Thus, it's not applicable in New Hampshire.
Thanks
As far as I know, a ladybird deed is applicable in Florida, Texas, Ohio, California, and Kansas. Thus, it's not applicable in New Hampshire.
Thanks
Is the information on the Lady Bird Johnson deed currently accurate for 2010 in the state of Texas? (concerning protection from nursing home obtaining home)
If I have a LBD on my mothers home and she has outstanding debt to the IRS or the State of OK Revenue Service, can those agencies place a lien on the property while she is still living?
Hi V J Swain,
As far as I know, there has been no change concerning protection from nursing home regarding the home. However, for better information in this matter, get in touch with a real estate attorney of your state.
Hi Sha,
If the property taxes regarding the said property has not been paid off on time, then the IRS and the State Revenue Service can place a lien on that property.
Thanks,
Jerry
As far as I know, there has been no change concerning protection from nursing home regarding the home. However, for better information in this matter, get in touch with a real estate attorney of your state.
Hi Sha,
If the property taxes regarding the said property has not been paid off on time, then the IRS and the State Revenue Service can place a lien on that property.
Thanks,
Jerry
Due to the economy we (my sister, my wife and I) were going to move into our parents home. They are in a nursing facility; can we do this without penalty; can medicaid still take the home for payment?
Hi TAP,
Your parents can transfer their property to you all with the help of a ladybird deed, if it's applicable in your state. Transferring property though a ladybird deed won't affect their eligibility for Medicaid benefits.
Thanks,
Jerry
Your parents can transfer their property to you all with the help of a ladybird deed, if it's applicable in your state. Transferring property though a ladybird deed won't affect their eligibility for Medicaid benefits.
Thanks,
Jerry