What is a Lady Bird Deed?
A lady bird deed (also called a ladybird deed or an enhanced life estate deed) is a special form of life estate deed that gives the owner continued control over the property until his or her death. Once the owner dies, the property is transferred automatically to new owners without the need for probate.
A lady bird deed requires special language to ensure that the deed qualifies as a lady bird deed. This language is automatically included by our Deed Generator. Get Deed
As discussed in How to Avoid Probate of Real Estate, a lady bird deed is one of only two deed forms that avoid probate at death without sacrificing control during life. In the handful of states that recognize them, ladybird deeds are a popular estate planning tool to avoid probate.
How Lady Bird Deeds Work
Like regular life estate deeds, lady bird deeds work by dividing ownership of real estate into different time periods. A person who creates a lady bird deed transfers property to himself for his lifetime. This creates a life estate in the original owner, who is called a life tenant.
A lady bird deed also names one or more people, trusts, or organizations to inherit the property after the original owner dies. This group of inheritors is called remaindermen or remainder beneficiaries.
The life estate retained by the original owner (life tenant) is enhanced, meaning that the original owner (life tenant) can change his or her mind without involving the remainder beneficiaries. If the original owner decides to sell or mortgage the property—or to gift it to someone else—he or she may do so without permission or involvement of the remainder beneficiaries.
If the original owner (life tenant) dies without changing his or her mind, the property passes automatically to the remainder beneficiaries by operation of law. There is no need to probate the deceased owner’s estate just to transfer title to the property.
These two features—retained control during life and automatic transfer at death—make lady bird deeds popular estate planning tools in the states that allow them. Lady bird deeds are available in only five states: Florida, Texas, Michigan, Vermont, and West Virginia.
Florida Lady Bird Deed Form Find Out More Get Deed
Michigan Lady Bird Deed Form Find Out More Get Deed
Texas Lady Bird Deed Form Find Out More Get Deed
Other Names for Lady Bird Deeds
Key Term: Lady Bird Deed. The term lady bird deed comes from a fact pattern used by Florida attorney Jerome Ira Solkoff in his teaching materials. Solkoff would use fictional characters to illustrate the use of this type of deed. One character was former United States President Lyndon Johnson’s wife, Claudia Alta “Lady Bird” Johnson. As Solkoff popularized this type of deed, people began to refer to it as the lady bird deed or ladybird deed instead of the technical name, enhanced life estate deed.
The technical name for a lady bird deed is enhanced life estate deed. The word “enhanced” distinguished lady bird deeds from regular (traditional) life estate deeds, which do not give the original owner/life tenant continued rights to deal with the property without the remainder beneficiaries’ involvement. Lady bird deeds are also called ladybird deeds (without the space between “lady” and “bird”).
Benefits of Lady Bird Deeds
Lady bird deeds have several features that make them popular estate planning tools.
Probate Avoidance. Probate is a court-supervised legal proceeding for transferring a deceased owner’s property to his or her heirs. Lady bird deeds avoid probate.
By transferring the property automatically at the deceased owner’s death, lady bird deeds remove the property from his or her probate estate. This removes the property from the jurisdiction of the probate court.
Although the remainder beneficiaries may want to record the deceased owner’s death certificate in the land records to show others that title has passed, there is no need for a court proceeding.
Retained Control. Lady bird deeds allow the original owner/life tenant to change his or her mind without responsibility to—or involvement of—the remainder beneficiaries. If the original owner/life tenant decides that she wants to sell the property or give it to someone else, she may do so. The remainder beneficiaries have no veto power or other decision-making ability while the original owner/life tenant is still alive.
Medicaid Planning. When a person applies for Medicaid, the office that administers Medicaid looks at any transfers made during the preceding five years. If a person transferred property during the five-year period, the value of that property is used to create a penalty period during which the applicant may not qualify for full Medicaid benefits.
Lady bird deeds are not considered a transfer for purposes of calculating the penalty period. Because the original owner/life tenant retains the right to use the property, the lady bird deed should not affect his or her ability to qualify for Medicaid.
Lady bird deeds can also help with Medicaid recovery. When a person receives Medicaid benefits, Federal law allows the state Medicaid agency to recover assets from the deceased person’s “estate” at his or her death. States differ in how they define “estate” for purposes of Medicaid recovery. Some states—like Michigan, Texas, and Florida—define “estate” to mean “probate estate.” In these states, lady bird deeds can avoid Medicaid recovery because they remove the property from the probate estate.
Federal Tax Planning. Because of the control retained by the original owner/life tenant, a lady bird deed is an incomplete gift for tax purposes. This has two tax benefits. First, there is no need to file a gift tax return or pay any gift tax on the transfer. Because tax law treats the original owner as still owning the property until death, it is as though the owner did not transfer the property during his or her lifetime.
Second, the property is included in the deceased owner’s estate for tax purposes when he or she dies. The remainder beneficiaries are treated as inheriting the property by virtue of the deceased owner’s death. This allows the property to qualify for stepped-up (or adjusted) basis. Stepped-up basis is beneficial because—for tax purposes—it erases any appreciation that may have accrued while the deceased owner held title. Because that appreciation is not taxed, the remainder beneficiaries will pay less income taxes if they sell the property.
Property Tax Planning. Some states—including Florida, Texas, and Michigan—cap the amount that the local taxing authority can increase the value of property to compute property taxes on a personal residence. As long as the cap is in place, the local taxing authority cannot exceed the increase specified in the cap, even if the property’s actual value exceeds the capped amount.
In areas where property value is increasing, the cap on increased property taxes provides a valuable benefit to the homeowner. This benefit is often lost when the homeowner transfers the property to a new owner. On the transfer, the local taxing authority can assess the property at its current market value, without regard to the cap.
Lady bird deeds can help avoid this problem. Because the transfer to the remainder beneficiaries does not happen until the owner’s death, the owner will not lose the benefit of the property cap on his or her home while he or she is still alive. This can prevent re-assessment of the property at its current market value and help save property taxes.
Retained Homestead Exemption. Many states provide favorable status to property that is used as a person’s principal residence (homestead). Homestead property often qualifies for lower tax assessment. It can also qualify for special creditor protections. When property is transferred by lady bird deed, these benefits should remain in place.
Saving Legal Fees. Many advantages described above can often be achieved using a living trust. This technique first requires the trust to be created. Once the trust is in place, a separate deed is needed to transfer property into the trust. This two-step process often requires an attorney and is always more expensive than the cost of preparing a lady bird deed.
The combination of these benefits often makes lady bird deeds a good choice in the states that recognize them.
Lady Bird Deeds and Warranty of Title
Deeds are often named the feature that defines them. Some deeds—like quitclaim deeds, special warranty deeds, and warranty deeds—are named after the warranty of title they provide. Others—like lady bird deeds, life estate deeds, and transfer-on-death deeds—are named after the probate avoidance feature.
The probate avoidance feature of a lady bird deed is independent of the warranty of title. Because the same deed can have different features, two names may correctly apply to the same deed. For example, a lady bird deed may also be a quitclaim deed.
Relationship to Last Will and Testament
A lady bird deed is a nonprobate transfer. Real estate transferred by lady bird deed passes outside of probate and does not become part of the probate estate. Because a will only controls assets that are part of the probate estate, and because property that passes by lady bird deed is not part of the probate estate, the terms of a person’s will are irrelevant to a lady bird deed. The property will pass to the remainder beneficiaries named in the lady bird deed regardless of what the will says and the personal representative named in the will has no authority over the property described in the lady bird deed.
Lady Bird Deeds and Title Insurance
Given the benefits of lady bird deeds, one may ask why they are only available in five states. The answer has to do with title insurance. Title insurance is an essential part of most real estate transactions. If a title insurance company will not insure title, then the deed will create costly title issues that require corrective legal action.
Title insurance companies are private businesses. It is up to the company to decide whether it will issue a title policy. If the title company won’t insure title passed using a particular type of deed (like a lady bird deed), then that kind of deed should be avoided. It doesn’t matter if the deed is in the correct format for recording. It doesn’t matter if the parties agree to the terms of the deed. It doesn’t even matter if a statute authorizes the deed. If the deed does not transfer insurable title, it should not be used.
When we say that lady bird deeds are recognized in five states, we are saying that—as a general rule—title insurance companies in those five states will insure title that passes through lady bird deed. Other states will not. Although there’s nothing to prevent someone in a state that does not recognize lady bird deeds from creating one, the deed may result in an uninsurable title that reduces the value of the property or requires court proceedings to straighten out.
How to Create a Lady Bird Deed
Unlike transfer-on-death deeds, lady bird deeds depend on common law instead of statutory authorization. Attorneys developed lady bird deeds a practical tool to meet client needs. As stated above, the validity of a lady bird deed often depends on whether a title insurance company in the state where the property is located will recognize the deed as valid.
Each state that recognizes lady bird deeds—Florida, Texas, Michigan, Vermont, and West Virginia—has its own requirements for validity. These requirements include the special language to create the enhanced life estate. They also include the state-specific requirements for all deeds, such as:
- A correct legal description;
- A statement of consideration provided, if any;
- If multiple owners are involved, and a specification of the manner in which co-owners will hold title;
- Font size and page format requirements that meet the state’s recording laws;
- Any indexing instructions, tax parcel numbers, or other information required by state law; and
- Signature and notary acknowledgments that follow the state’s required format.
It is important to create a lady bird deed that meets all state requirements. Using a one-size-fits-all form or a form for another state can create unintended consequences. Each lady bird deed included in our Deed Generator was designed by attorneys to meet the requirements of the law where the state is located.
FAQs
Lady Bird Deed | What is a Ladybird Deed? ›
In Texas, these kinds of deeds are typically used for homestead property, to allow a grantor the ability to keep the homestead until death and then transfer it automatically to a grantee (for example, the grantor's child) without the necessity of probate.
What are the disadvantages of a ladybird deed? ›Disadvantages of a lady bird deed
Property taxes may be higher for the beneficiary. States may increase the taxable value of a property when it transfers to your beneficiary when you die. Thus, the beneficiary of a lady bird deed might be hit with higher property taxes once they inherit the property.
Upon your death, the property immediately transfers to the beneficiary designated in the deed. It's a streamlined way to pass down a home, but there is a catch: you can't sell or mortgage the property without the beneficiary's consent. A lady bird deed is considered an enhanced life estate deed.
Can a lady bird deed be contested in Michigan? ›As long as the owner is alive and has the capacity to revise legal documents, provisions of the lady bird deed can be changed or the deed can be revoked and terminated. However, if the deed is still in place on the owner's death, ownership of the property transfers to the designated beneficiaries automatically.
Why is a ladybird deed called a ladybird deed? ›This type of deed got its nickname when President Lyndon B. Johnson used it to convey property to his wife, Lady Bird Johnson. It is valid under Michigan Land Title Standard 9.3 (pdf).
Do you pay taxes on a lady bird deed in Florida? ›Lady bird deeds do not result in any documentary stamp taxes when you execute the deed. In Florida, you are required to pay documentary stamp taxes on the transfer of real estate for any consideration, including the amount of any mortgage on the property.
How much does a ladybird deed cost in Florida? ›While there is quite a range, to have a ladybird deed prepared by an attorney in the state of Florida will cost around $350 or less, plus recording fees. If you decide to use a template online, that will run you around $50-$100.
Can a lady bird deed be revoked in Texas? ›The Grantor can file a revocation or filing a subsequent conflicting Ladybird Deed. The Grantor can also revoke the deed if they sell, gift, or transfer the property during their lifetime.
Does a lady bird deed have to be recorded in Texas? ›In order for a Transfer on Death Deed to be valid, it must be signed, notarized, and recorded in the property records of the county where the property is located. In contrast, a Lady Bird Deed does not have a recording requirement. All that is required for a deed to be valid in Texas is delivery to the Grantee.
What is the difference between a transfer on death deed and a ladybird deed in Texas? ›The Texas TOD statute is clear that a transfer-on-death deed may not be created using a power of attorney. Lady bird deeds can be signed by an agent under a valid power of attorney.
What are the pros and cons of a lady bird deed in Michigan? ›
Michigan Lady Bird Deeds Can Help You With
If your home goes through Probate, it could be subjected to a Medicaid Recovery and the proceeds could be taken by the State. However, a Lady Bird Deed allows for you to qualify for Medicaid benefits while preventing the government from going after your home.
The cost for a Lady Bird deed in Michigan can vary, generally less than $500. Keep in mind, this document takes additional attorney time when drafting the document, as the individual circumstance(s) and the appropriateness of the deed should be evaluated by an Estate Planning attorney.
What is a Texas form lady bird deed? ›The Texas lady bird deed form allows property to be automatically transferred to a new owner when the current owner dies, without the need to go through probate. It also gives the current owner retained control over the property, including the right to change his or her mind about the transfer.
What is another name for a ladybird deed? ›A lady bird deed is an estate planning tool that enables a Medicaid beneficiary to protect their home as an inheritance from their state's Medicaid Estate Recovery Program. A lady bird (ladybird) deed goes by a variety of names, including an enhanced life estate deed, lady bird trust, and a transfer on death deed.
What does ladybird mean in law? ›A Lady Bird Deed is a transfer of property to another with a reservation of a life estate. Meaning a person can transfer property and retain ownership in that property until death, at which point it will then transfer to the other.
What are the omens of a ladybird? ›Good luck. If you have ladybugs on your property, you can bet they're helping keep your plants alive and healthy. As such, ladybugs are thought of as a sign of good luck and good fortune, Star Wolf tells mbg. "If one lands on you, it's said to be a kiss of good luck," she adds.
What are the advantages of a lady bird deed? ›Advantages of Lady Bird Deed
While a Lady Bird deed is similar in the sense that it allows the grantor to convey a future interest in the property and maintain a life estate, the Lady Bird deed also has the added benefit of maintaining complete control of the property during the grantor's lifetime.
What is the Florida Lady Bird deed? A Florida Lady Bird deed, formally known as an Enhanced Life Estate Deed, is designed to allow property owners in Florida to transfer property to others automatically upon their death while maintaining use, control and ownership while alive.
What are the disadvantages of a life estate? ›- The life tenant cannot change the remainder beneficiary without their consent.
- If the life tenant applies for any loans, they cannot use the life estate property as collateral.
- There's no creditor protection for the remainderman. ...
- You can't minimize estate tax.
Florida law requires that an attorney be involved in formal probate. Probate is both expensive and time-consuming for a family. A lady bird deed avoids probate because the property title automatically transfers to the remainderman by “operation of law.” The subject property is not part of the decedent's probate estate.
What are the cons of a lady bird deed in Florida? ›
Disadvantage of a Lady Bird Deed in Florida
You may not use the Lady Bird Deed to circumvent the devise rules of the Florida homestead law. Florida Homestead Law states that if you are surviving by minor children, you many not devise (transfer) your Homestead in a Will or a Trust to anyone.
Florida law states that surviving spouses will automatically inherit any property titled joint with rights of survivorship or as tenants by entities. That's because jointly owned assets do not need to pass through probate administration.
Can you remove someone from a deed without their knowledge in Texas? ›Generally speaking, a person cannot be removed from a deed without their knowledge and consent. It is possible to remove someone from a deed illegally by recording a new deed with a forged signature. However, such a deed resulting from fraud or forgery is void and can be easily removed by a court.
Does my wife need to be on the deed in Texas? ›In the real estate context, even if only one spouse is listed on the deed, the property is considered to be jointly owned by both spouses as community property. A spouse may not sell, mortgage, or otherwise deal with real estate titled as community property without involving the other spouse.
What is a quiet deed in Texas? ›A suit to quiet title is a legal procedure to establish a person's right to ownership of real property against other adverse claimants. It helps clarify the ownership and validity of contracts or liens on a piece of property.
How does the deed of a house transfer after death in Texas? ›When you die, your property interest passes to the person you named in the Transfer on Death Deed (the “beneficiary”) without any probate action. You can name more than one beneficiary, and you can change the beneficiary at any time by cancelling the Transfer on Death Deed or making a new one.
What happens to a house when the owner dies without a will in Texas? ›If you have no spouse or children, your property will be split among your parents and/or siblings, depending on who survives you: If both parents are still living, ½ goes to Mother and ½ goes to Father. If one parent and siblings (or siblings' descendants) are still living, ½ goes to surviving parent and ½ to siblings.
How do I avoid probate in Texas? ›To avoid your assets going to people you didn't intend them to and to prevent them from going through the probate process, you can set up a trust, joint ownership with a right of survivorship, transfer on death deeds, or beneficiary designations.
What are the disadvantages of a transfer on death deed? ›Disadvantages of a Transfer on Death Deed
For example, your property will be subject to probate court if your beneficiary predeceases you and you lack an alternate estate plan. Another disadvantage is if you co-own property under a joint tenancy.
The Transfer on Death Deed
First, a TODD cannot be signed or revoked by power of attorney. A lady bird deed can be signed and revoked by power of attorney, as long as the power of attorney document grants the power of attorney the necessary authority.
Can you record a deed after someone dies Texas? ›
If the property owner is deceased, he or she can no longer sign the deed. In that case, you need something different such as an Affidavit of Heirship, a probated Will or a court order determining heirship. First the deceased owner's name must be removed from the record ownership of the house (the title).
Do you pay taxes on a lady bird deed in Michigan? ›A Lady Bird Deed will not increase your property taxes because it does not uncap your property tax. This is because you still own the property until your death. Since there is no transfer until your death, your property tax is not uncapped.
What are the benefits of a ladybird deed in Michigan? ›The Lady Bird Deed is otherwise known as an enhanced life estate. It is a tool that allows you to transfer ownership to your heirs at your natural death. A major benefit of this method is that you are still able to sell, lease or mortgage the property without their permission during your lifetime.
Who inherits when there is no will in Michigan? ›If you do not have a surviving spouse, your children inherit your estate in equal portions. If there are no surviving children, your surviving grandchildren, siblings, or parents will be entitled to the estate, according to specific provisions in the Michigan statute.
How do I avoid probate in Michigan? ›In Michigan, you can make a living trust to avoid probate for virtually any asset you own—real estate, bank accounts, vehicles, and so on. You need to create a trust document (it's similar to a will), naming someone to take over as trustee after your death (called a successor trustee).
Does Michigan recognize transfer on death deeds? ›Michigan is one of the more than twenty-five states that now allow the use of TOD deeds, and more states are considering adopting laws that allow them. You do not have to actually live in a state that allows TOD deeds to be able to use one, but the property must be located in such a state.
What is the difference between a trust and a lady bird deed in Michigan? ›Like a Lady Bird Deed, a trust avoids probate. Unlike a Lady Bird Deed, however, the assets that can be in a trust are more than just the family home. So, for those who have extensive assets or want to protect more than just the family home, a trust can be a good estate planning tool to use.
What is slang for ladybird? ›A lover or kept mistress.
What is the meaning of ladybird? ›noun A lady-love; a sweetheart: often used as a term of endearment.
What is the old name for a ladybird? ›Ladybirds have long been of interest to children. They once had many regional names in English, such as variations on Bishop-Barnaby (Norfolk and Suffolk dialect) – Barnabee, Burnabee, the Bishop-that-burneth, and bishy bishy barnabee.
What does a 7 spot ladybird mean? ›
The name 'ladybird' comes from Christianity in which the 'lady' is the Virgin Mary and the red colour of the insect is her cloak. The seven spots are her seven joys and seven sorrows. Credit: Pauline Smith / WTML.
What is the superstition about ladybird? ›Historically and cross-culturally, ladybugs are believed to be talismans of luck. Some believe that, if a ladybug lands on you, you should count the number of spots to predict how many years of good luck you'll have. Many think the spots indicate the number of months until your greatest wish comes true.
What is the biblical meaning of a ladybird? ›The ladybug is a bringer of gifts. It brings oil to Jesus, wine to Mary and bread to God the Father. It is, in particular, the bringer of good things to humans: clothes and pots and jewels.
What does it mean when a ladybird lands on you spiritually? ›“When a ladybug lands on you, it symbolizes good luck and good fortune to come,” says Jenelle Kim, DACM, L.Ac, a doctor of Chinese medicine, wellness and mindfulness expert, and author of Myung Sung: The Korean Art of Living Meditation.
Is it lucky to have a ladybird in your house? ›In cultures across the globe, ladybugs have come to symbolize prosperity. It's even been said that finding one of these beetles in your home signals good luck.
How much does a ladybird deed cost in Michigan? ›The cost for a Lady Bird deed in Michigan can vary, generally less than $500. Keep in mind, this document takes additional attorney time when drafting the document, as the individual circumstance(s) and the appropriateness of the deed should be evaluated by an Estate Planning attorney.
Who inherits when there is no will in Texas? ›What Happens to Your Assets When You Die Without a Will in Texas? Intestacy laws in Texas state that your assets will be distributed to your closest relatives. This usually means that the community property is divided equally between your surviving spouse and all of your descendants.
Does a ladybird deed avoid probate in Michigan? ›In Michigan, a Lady Bird Deed (also known as a Ladybird Deed or Enhanced Life Estate Deed) is a type of Quitclaim Deed that allows you, the creator, to transfer your property upon your death to a named beneficiary without having to go through the expensive and time consuming Probate process.
How can I leave money to my son but not his wife? ›Trusts. One of the most common and effective ways of shielding your assets from your children's spouses is setting up a trust. A trust is a legal entity that holds and manages property for the benefit of one or more beneficiaries.
When a husband dies what is the wife entitled to in Texas? ›Generally speaking, each spouse has a right to half of the community property and so, this is automatically distributed to a widow after their spouse's death. Therefore, the deceased individual only has the right to control their half of the community property estate.
What happens if a property owner dies without a will and with no heirs the state of Florida? ›
When you die without a will and the property is controlled by the Florida Intestacy Statutes, meaning the property did not have a proper beneficiary designation, then the property will need to get probated. Probate is a legal process in Florida that is supervised by the court.
How does the Texas Lady Bird deed work? ›A Lady Bird deed is a special kind of deed that is commonly recognized by Texas law. Also called an enhanced life estate deed, it can be used to transfer property to beneficiaries outside of probate. It gives the current owner continued control over the property until his or her death.
What is the purpose of a lady bird deed in Texas? ›A lady bird deed helps you and your family avoid probate by automatically transferring the property to the designated beneficiary upon death of the original owner.