By now, you have heard your friends and neighbors talk about Lady Bird Deeds. You are wondering if this is something you need to investigate.
First, many individuals think it is a simple easy way to do estate planning by executing a Quit Claim Deed putting other family members on their property. It may be quick and easy, but it isn’t a good idea.
If you make others joint owners of your property, you are giving them valuable property rights. They become a co-owner with you. So, what is the downside?
As a co-owner, their creditors could pursue your property. For instance, if your co-owner (usually a family member) got into an automobile accident which exceeded his or her insurance, the injured parties could come after your property.
Next, once an individual is a co-owner, you need their permission to sell your property. This can become a genuine problem for parents who desire to sell vacation property. The kids who are co-owners decide that they do not want to sell the family cottage. This stops the sale.
The better approach is a Lady Bird Deed. This transfers real property from the owners to themselves and others as joint tenants; however, they retain a life estate and the right to sell. This fills the gaps outlined above. The owners still have control over the property and the right to sell it until their deaths. Since they have the right to sell, a co-owner’s creditor is unable to force a sale of the property.
The execution of this document also eliminates the need for the property to go through Probate Court. When the original owners of the property pass away, the property is owned by the other joint tenants by operation of law, immediately upon the owners’ deaths.
This may be an important tool that you need in your estate plan