Ladybird Deed or Transfer on Death Deed—The Better Option

Transferring ownership of real property is completed by documenting a signed paper, generally referred to as a “deed.” It is a document signed by the person or persons who own the property (the Grantor) and sell or gift real property to someone else. The recipient of the gift or sale is referred to as the Grantee (the Grantee). 

The question, “Can you transfer real property to someone now but make it effective at the time of your death?” is one that people ask rather frequently. The answer is yes, but only under one condition: strictly adhering to state regulations. Ladybird deeds and transfer-on-death deeds are the two most common to transfer real estate after the property owner’s death. Both of these deeds take effect when the original owner dies.

In most cases, elderly parents want to make estate planning as easy as possible for their children and other heirs so that they can reduce the financial burden and emotional strain of having to go through the probate process. Sometimes, they may be attempting to qualify for Medicaid to receive financial assistance to cover the costs of nursing home care. 

Both the Ladybird Deed and the Transfer on Death Deed can be utilized in either circumstance to facilitate the transfer of the homestead or any other real property to children or other members of the family. Until the current owner of the land has passed away, neither of these deeds, even correctly structured, will finish the process of transferring title to the property.

What is a Transfer On Death Deed?

The “transfer on death” deed has been given a statutory form that the state has approved. Without going through the lengthy and expensive process of probate, this deed enables the transfer of the real estate to the beneficiaries of your choice following your passing. The individual who initiates this transfer is referred to as the Grantor. 

They are given a life estate in the property so that they continue to have full ownership and management rights while still alive. After the Grantor passes away, all that is required to transfer title to the beneficiaries, who are also called grantees, is the filing of an affidavit that confirms the Grantor’s passing, makes reference to the recording information held by the clerk, and states unequivocally that the estate does not have any delinquent debts.

The statutory form transfer on the death deed, on the other hand, mandates that the beneficiaries give their permission before the Grantor can sell the property, take out a mortgage on the property, revoke the deed, or change who the beneficiaries are going to be after the Grantor’s death. Sometimes the beneficiaries are not ready to agree, which might give the Grantor significant difficulty if the circumstances have changed significantly since the deed was drawn up.

What is a Lady Bird Deed?

The common law gave rise to the concept of an increased life estate deed, also known as a Lady Bird Deed. Like the TODD, the Lady Bird Deed enables a person to transfer property without going through the probate process when the homeowner passes away. However, in the case of Lady Bird Deeds, the homeowner keeps a life estate in the property while the beneficiaries acquire the remainder of the estate upon the homeowner’s passing. 

The original owner of the property, who now has a life estate interest, does not lose the power to revoke the deed or sell the land at any time. As a result, the homeowner can maintain control over the probate process by using Lady Bird Deeds while also transferring title directly to beneficiaries outside the scope of the probate process. The states of Florida, Texas, Vermont, Michigan, and West Virginia are the only ones that recognize Lady Bird Deeds.

Benefits of Both The Deeds

The statutory transfer on the death deed or the LBD can be used to transfer the property after the Grantor’s death and keep it out of probate. Both of these deeds come with additional advantages. These deeds have the potential to be a useful instrument for removing the Grantor’s ability to receive the full worth of the real estate from consideration while Medicaid eligibility is being determined. After one of these deeds has been drafted and filed, the computation will only include the value of the life estate in the property, not the whole worth of the property.

In addition, the utilization of any of these deeds shields the real estate from placing a Medicaid lien on the property upon the Grantor’s passing, at least according to the laws. In many cases, the Medicaid lien is so large that it completely wipes out the property’s value, leaving the heirs with nothing to inherit. It would be possible to sell the property to pay off a Medicaid lien if one of these deeds had not been utilized and the property had remained in the name of the Medicaid beneficiary at the time of death.

Which Deed to Choose? 

Understanding the distinction between TODDs and Lady Bird Deeds might be challenging. TODDs are used when contingent beneficiaries are included. TODDs are often preferred by estate planning attorneys when contingent beneficiaries are included. In contrast, Lady Bird Deeds have the advantage of being able to be executed (and revoked) by a Power of Attorney rather than the actual homeowner of the property. 

In addition, Lady Bird Deeds offer a modest benefit when it comes to creditor protection if the property covered by the deed was not the deceased person’s primary residence and the estate ended up being unable to pay its debts.

The Bottom Line 

Even while the two good actions have the same end goal in mind, some significant distinctions between them might be of more assistance to certain individuals than others. It is difficult to claim that one deed is superior to another since it is all subjective in terms of what the person wants to accomplish or how they want their property taken care of after they pass away.

Adopting these deeds can help individuals avoid the time-consuming and financially burdensome process of establishing a living trust while achieving the same objective. If you have doubts about which deed would be most appropriate for your circumstances or if a trust would be appropriate in general, you should speak with an attorney specializing in estate planning. Visit to learn about the different types of deeds available and find one that suits you best.

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