Life estates let you transfer property while retaining the right to live there until your passing. As the grantor, you become the life tenant.

Lady Bird Deeds, or enhanced life estate deeds, provide greater control over the property transfer, allowing the grantor to retain rights like selling, mortgaging, and tax exemptions. Upon the grantor’s death, the beneficiary takes control without court involvement. Only a few states permit this, including Florida, Texas, Michigan, Vermont, and West Virginia.

6 Reasons to Set Up a Lady Bird Deed

Consider a Lady Bird Deed for these reasons if permitted by state law:

1. Avoid court decisions and associated costs.
2. Expedite probate for other assets by removing a large asset like your home from the process.
3. Simplify matters for properties in multiple states, streamlining the legal process for your loved ones.
4. Reduce disputes among heirs by deeding assets directly to beneficiaries, avoiding probate.
5. Retain significant control over real estate while alive.
6. Enjoy tax advantages comparable to the “step-up” heirs receive in probate.

The beneficiary also receives a “step-up” in basis, saving on capital gains tax. Potential downsides your beneficiary may be exposed to include no protection from creditors or divorce and potential Medicaid qualification issues.  These are issues anyone inheriting outside of trust can face.

Are There Any Downsides to Lady Bird Deeds?

Lady Bird Deeds come with drawbacks, notably the lack of protection during the grantor’s lifetime from divorce or creditors (if not homestead property). These exposures are because the title is still held in the grantor’s individual name.

Connect With An Estate Planning Attorney

If you are interested in an enhanced life estate deed and an alternative way to transfer property to loved ones, feel free to contact us for a strategy session.