Estate Planning: Lady Bird Deed

The term "Lady Bird Deed" is a nickname given to the Enhanced Life Estate Deed which is used to convey property to your heirs outside of probate. 

The nickname "Lady Bird" was given to the deed after President Lyndon B. Johnson allegedly used this type of deed to convey some of his real property to his wife Lady Bird. 

So why would President Johnson use this type of deed?

Texas Enhanced Life Estate Deed

Texas is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away.  

In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away.

Florida Enhanced Life Estate Deed

Florida is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away.  In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away.

Unlike Beneficiary Deeds in other states, the Florida Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive.  This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive.  There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Texas Enhanced Life Estate Deed, Ohio Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.

Kansas Enhanced Life Estate Deed

Kansas is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away.  In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away. 

Unlike Beneficiary Deeds in other states, the Kansas Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive.  This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive.  There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Florida Enhanced Life Estate Deed, Texas Enhanced Life Estate Deed, and Ohio Enhanced Life Estate Deed.

What is a Beneficiary Deed?

A Beneficiary Deed is used to transfer a property owner's real property to his heirs without going through the probate process which can be time consuming and expensive.

Included in the Beneficiary Deed are the names of the property owner's "beneficiaries." The interest in real property conveyed by a Beneficiary Deed does not take effect until the death of the owner. When the owner passes away the interest stated in the Beneficiary Deed transfers automatically by law to the designated "beneficiaries" named in the deed.

As stated above, a Beneficiary Deed takes the property out of the probate process as ownership is transferred upon death and no longer part of the decedent's estate. A beneficiary deed typically avoids the cost and delay of probate because the property is not part of the probate estate of the deceased owner. However, the property is usually included in the deceased's estate for estate tax purposes. Gift taxes may not apply because the Beneficiary Deed is not a present transfer of property.

Beneficiary Deed v. Trust
A Beneficiary Deed is typically less complex and expensive than setting up a trust. However, a trust may still be desirable in certain situations, such as when the beneficiary is a minor, when multiple beneficiaries will own undivided interests in the property, or when property is owned as joint tenants with right of survivorship.

Beneficiary Deeds are more common among the various states than the Enhanced Life Estate Deed. State laws governing beneficiary deeds vary by state, so local laws should be consulted.

Quick Claim Deed

Quick Claim Deed
A Quik Claim Deed is the common misspelling for the legal document known as the Quit Claim Deed.  It can be used to transfer someone's ownership interest in a piece of property to another person.  The Quit Claim Deed is usually used by family members to transfer property back and forth.  There are no warranties or representations made in a Quit Claim Deed.

Ohio Enhanced Life Estate Deed

Ohio is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away.  In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away. 

Unlike Beneficiary Deeds in other states, the Ohio Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive.  This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive.  There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Florida Enhanced Life Estate Deed, Texas Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.

What is a Life Estate Deed?

The short answer is a Life Estate Deed is a document that grants ownership of a parcel of real property to two separate parties: (1) the Life Tenant, and (2) the Remainderman.

The Life Tenant

The deed gives the Life Tenant complete use and ownership of the property for a certain period of time.

Creditors and the Lady Bird Deed

Does a Lady Bird Deed Protect My Property from Creditors of My Beneficiaries?
Yes.  A Lady Bird Deed does not transfer ownership of the property to your beneficiaries until you pass away.  This is different from other forms of transfer like the life estate, tenancy in common or joint tenancy with right of survivorship.  While you are alive, your beneficiaries' creditors cannot attach or satisfy any claims to your property.  A Lady Bird deed even allows you to remove a beneficiary if you find out that beneficiary has a creditor or creditors who would end up taking that beneficiary's portion of your property.

In states that recognize "tenancies by the entireties," Lady Bird deeds also protect married couples who own their home as husband and wife.

Payable on Death Bank Accounts

Most states' banking regulations allow bank account owners the ability to name a beneficiary of their bank accounts in the event the bank account owner dies. 

POD Account Avoids Probate
A Payable on Death (POD) bank account is not included in the account owner's estate and, therefore, passes to the beneficiary outside of probate. 

How a POD Account Works
A POD account is different from a Joint Account in that the named beneficiary of a POD does not own an interest in the bank account until after the bank account owner passes away. The beneficiary cannot withdraw funds from the account while the owner is still alive and creditors of the beneficiary cannot attach the account to satisfy the beneficiary's debts. 

How a POD Account is Set Up
To set up a POD bank account you will be required to execute a written contract with the bank designating the beneficiary of the account.  Your bank likely has a standard form POD contract, but if not you may want to consult an Estate Planning attorney. The contract allows the owner to retain full ownership of the account during his lifetime.  To change a POD beneficiary, the account owner would need to either close the account or fill out a new account registration card naming the new POD Payee.

Summary of POD Accounts
(1) Easy and Free to name a beneficiary (usually just by listing the beneficiary on the signature card as "P.O.D. Payee";
(2) P.O.D. Payee has no current interest in your bank account;
(3) Unlimited amount of money may be left to beneficiary using a POD;
(4) Easy for the beneficiary to claim the funds upon death of account owner.  In most states all that is required is to show a death certificate to the bank;
(5) In most states, however, you cannot name an alternate beneficiary.

For information on naming minor children as beneficiaries to a POD account read my article POD Accounts and Minor Children.