A fairly new estate planning trick that is extremely effective and low cost is a deed with a retained life estate or “Lady Bird” deed. This tool can be used for all types of real estate interests.
This type of deed allows you to name the beneficiaries you wish to receive real estate on your death, who are called “remaindermen”, but you retain all of the benefits of ownership of the property until your death. Texas law allows you even to retain the homestead exemption you claim on your home after the Lady Bird deed transfer.
Your Rights of Ownership Retained During Your Life
The Lady Bird deed, if drafted properly, also allows you as the owner of the “life estate” in the property to mortgage, lease, sell, or even revoke the deed without the consent of the remaindermen. This special feature of the Lady Bird deed or deed with enhanced life estate is not recognized in all states, however, so out-of-state property may or may not be dealt with in this same manner.
Saves Time, Trouble, and Expense
The Lady Bird or enhanced life estate deed saves the trouble and expense of probate or some other simpler non-probate procedure to transfer title to real estate on your death. It also makes the transfer of title to your beneficiaries much quicker. All that is required following your death is the filing of an affidavit reflecting your passing in the real property records of the county where the property is located.
Medicaid Lien Avoidance
Currently, another major benefit of using a Lady Bird or enhanced life estate deed is placing the property beyond the reach of a Medicaid lien if you received Medicaid benefits during your lifetime which had not been repaid. Again, Texas law may be different on this point than other states, and Texas law could change in the future.
How To Get Started
The use of this estate planning tip is something that should be explored with an attorney because of its potentially huge benefits. If you would like to discuss the possibility of including such transfer your estate plan, please contact Adair M. Buckner to schedule a free initial consultation*.
*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)
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