Friday, January 25, 2019

What is the difference between a transfer on death deed and a Ladybird Deed?

Texas property owners have two options for transferring property to another person to avoid property. In addition to the Ladybird Deed, Texas lawmakers enacted laws creating a Transfer on Death Deed in 2015. However, each of these deeds has specific requirements and advantages. Before utilizing a Ladybird deed or a Transfer on Death Deed, you may want to consult a Texas lady bird deeds lawyer to determine which option is best given your circumstances.

What Are the Differences Between a Ladybird Deed and a Transfer on Death Deed?

One of the advantages of a Ladybird Deed and a Transfer on Death (TOD) Deed is that they both avoid probate for real estate. Another important advantage for many individuals is that both deeds can avoid recovery of assets for a Medicaid claim.  Therefore, TOD Deeds and Ladybird Deeds can be important tools used during Medicaid planning for long-term care needs.  However, there are some differences that individuals should be aware of before deciding whether to use either deed as part of their estate plan.

  • Transfer on Death Deeds
    TOD Deeds allow you to transfer the real estate to another person, but continue to use the real estate during your lifetime. You have the right to reside on the property or lease, mortgage, and sell the property during your lifetime. If you sell the property, you receive the proceeds generated from the sale. You may also terminate the transfer of the remaining interest to the beneficiary at any time before your death.
    A downside of a TOD Deed is that the interest conveyed through a TOD Deed is subject to claims against your estate for two years after your death. Also, the person receiving the property must survive you by 120 hours, or the property passes through your estate. Lastly, you must have the legal capacity to sign the TOD Deed. A Power of Attorney or other legal representative does not have the power to sign a TOD Deed on your behalf.
  • Ladybird Deeds
    Ladybird Deeds have the same benefits of a TOD Deed. You can transfer real estate to a beneficiary to avoid probate while continuing to use the property during your lifetime. You can cancel the transfer at any time before your death. However, Ladybird Deeds are not subject to the same survival restrictions and estate claims. 
    Furthermore, a Power of Attorney can sign Ladybird deeds on behalf of the grantor. Therefore, your Power of Attorney can sign a Ladybird Deed even though you may lack the mental capacity to sign a legal document, provided the agent holds a durable power of attorney. This advantage of a Ladybird Deed makes it very useful in Medicaid planning when the individual has a mental incapacity or a disorder that prevents him or her from signing a deed.

Consult A Texas Estate Planning Attorney for More Information

Ladybird Deeds and Transfer on Death Deeds can be useful estate planning tools. However, these deeds must be executed and filed correctly. If you have questions, contact the Law Office of Carey Thompson today to help you determine if one of the deeds would be beneficial for you and your family. Our lady bird deeds attorneys can draft and file your deed to ensure the deed complies with all Texas laws related to the use of TOD Deeds and Ladybird Deeds.

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