A lady bird deed, also known as an “enhanced life estate deed,” is a document used for transferring ownership in real estate to a beneficiary/grantee upon the owner’s death. One of the primary features of this deed is that the owner retains all ownership rights over the property, allowing them to sell, mortgage, or lease the property as they see fit. For the five (5) states that permit Lady Bird Deeds (see below), they can be a useful and straightforward means of ensuring property is handled appropriately after death.
- West Virginia
A ladybird deed is a legal document used for passing down property without requiring the beneficiary (grantee) to go through probate. As a type of estate planning tool, it is commonly used in conjunction with wills, revocable trusts, and other forms.
It can also be referred to as an “enhanced life estate deed,” where the “life estate” portion refers to the fact that the deed doesn’t alter the owner’s possession of the property in any manner while they are alive.
- Circumvents probate. Because the property is transferred immediately after the owner’s death, the property effectively “skips” the probate process. While there may still be a probate process to distribute other assets of the owner’s estate, they can rest easy knowing the real estate indicated in the lady bird deed won’t be involved.
- Owner retains power over the property. Should the owner want to sell or rent out the property, they can do so freely. The owner does not need to receive permission from the beneficiary named in the deed.
- Avoids Medicaid estate recovery. Because a lady bird deed skips the probate process, it also avoids any claims made by the state to attempt to collect money owed for Medicaid treatment the owner may have received.
- Only covers real property. The convenience provided by the form only applies to real estate. Any other assets owned by the grantor must be passed down by using traditional tools such as a will or trust.
- Can cause issues for multiple beneficiaries. Once the property has been conveyed to the beneficiaries, all would need to be in agreement in order to dispose of the property. If the beneficiaries get along well, this issue is negligible.