I recently completed a Texas Enhanced Life Estate deed for a client, otherwise known as a Texas Lady Bird Deed. Being a history buff, I always appreciate how certain legal terms are coined.
The name Lady Bird Deed originated from when former President Lyndon B. Johnson used this type of deed to transfer property to his wife, popularly known as Lady Bird Johnson. A law professor then used the name when demonstrating how these types of deeds work, and the name stuck. Texas is actually one of the few states to recognize a Lady Bird Deed. Depending on your circumstances, this may be a viable option for you.
What Is A Lady Bird Deed?
A Texas Lady Bird Deed is a special type of estate deed designed specifically or Real Property owners to transfer property to beneficiaries in order to avoid probate at death. The Texas Lady Bird Deed gives the current property owner continued control of the property until their time of death.
What Terms Are Important To Know?
The owner of the property (or the grantor) who creates a Lady Bird Deed continues to own the property for the rest of his/her life.
The other person named as the grantee in the Deed, is called the remainder beneficiary.
What Makes A Lady Bird Deed Different From Other Deeds?
The main distinguishing feature of the Lady Bird Deed is that the current owner (or grantor) maintains the right to sell, transfer, or mortgage the property until his or her death without the remainder beneficiary’s (or grantee’s) consent.
Under traditional deeds, the grantor cannot transfer complete ownership of the property without the remainder beneficiary’s consent. In Texas, a Ladybird Deed overcomes this restriction by reserving the grantor’s enhanced powers over the property. The grantor also can withdraw or change his/her mind about the gift of the real property to the grantee.
What Are The Advantages Of A Lady Bird Deed?
Texas Lady Bird Deeds are designed to avoid probate. The property automatically transfers to the grantee when the current owner dies, so probate is not legally required.
Additionally, Texas Lady Bird Deeds can be used to preserve Medicaid eligibility during the owner’s life. The grantee can avoid losing property to the government’s Texas Medicaid Estate Recovery Program when the grantor dies.
There are other benefits, one of which is the reduced cost of avoiding probate for the grantee since the property automatically transfers to the grantee at death.
What Are Some Potential Disadvantages Of A Lady Bird Deed?
If you are looking to leave a property to multiple beneficiaries, this may not be the deed for you. All beneficiaries listed would have to agree on what to do with the property or how to manage it.
If you have any other assets you wish to distribute outside of Real Property, this must be done through a will, trust, or other instrument.
Is A Lady Bird Deed Right For You?
The only way to determine if this is a good fit for you is by working with a qualified estate planning attorney to develop a plan to achieve your estate goals.
I am here to help you take the next steps, whatever they may be, to protecting your family and the assets you’ve worked so hard for.