What Are the Benefits and Drawbacks of Lady Bird Deeds?
A “Lady Bird” Deeds can be an important strategy for estate planning with Davidson Law Group. Whether you’re a property owner or a beneficiary, you’ve probably heard of Lady Bird deeds. But you may not know how they can benefit you or limit you, depending on your situation. Our attorneys are here to explain some of the advantages and disadvantages of Texas Lady Bird deeds, and when to use them. Read today’s blog for the details.
What Are Lady Bird Deeds?
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.
Some Advantages of Lady Bird Deeds
Texas Lady Bird deeds provide many benefits that make them an appealing option for many Texas property owners.
Lady Bird deeds are intended to avoid probate by automatically transferring property upon a deceased owner’s death. When this happens, you can avoid concerns about cost, delays, and privacy that often occur during probate.
Medicaid Asset Protection
A Lady Bird deed can also help you when you apply for Medicaid, as it allows you to transfer property rights and maintain control of the property. The deed can keep assets in the family that would, under other conditions, be taken by the state.
Texas is one of the many states with laws for property claimed as a primary residence (homestead). Because the owner who uses a Lady Bird deed controls the property during his lifetime, it reserves its Texas homestead. The owner can then exploit the property tax exemptions that are accessible to Texas homestead.
Some Disadvantages of Lady Bird Deeds
While Lady Bird deeds can help you avoid probate and remain eligible for Medicaid, there are a few drawbacks that you should be aware of.
They May Require Additional Work
Sometimes, new circumstances arise, and the property owner changes his mind about the transfer. When this happens, it will require some additional legal work, such as contacting the right beneficiary to sign new deeds.
The role of title insurance is another disadvantage of a Lady Bird deed. Standard title insurance policies do not usually cover those who receive a real property gift. It’s best for a property owner to have title insurance to protect against potential mistakes.
Estate Taxes and Liens
Tax clearances must still be acquired when a life tenant passes, and an estate tax return may be needed. When an owner is likely to leave an unpaid property lien when he passes away, it’s not a good idea to use a Lady Bird deed.
To learn more about the pros, cons, and details of Lady Bird deeds, get in touch with our estate attorneys.
Contact Us Today in Fort Worth, Allen, or Tyler
If you or a loved one are looking to file Lady Bird Deeds, contact the Davidson Law Group today. The estate planning process can be complicated, and we are here to help guide you through each step. Reach out to our estate attorneys in Fort Worth, Allen, or Tyler to set up a free consultation.