There are so many adults today who don’t take the time to create their last will and testament and their loved ones are forced to learn the hard way about the processes involved with transferring a property once someone has passed. Unfortunately, passing on your belongings is not as quick and simple as it seems in movies and televisions, and many times the assets you are attempting to pass on, will get tied up in a long and costly process called probate.
Estate planning can be quite complex, but there are two very important deeds that can help you avoid probate in the state of Texas: the lady bird deed and the transfer of death deed.
These deeds have similar goals, to avoid real estate recovery but a few key differences. The more you know about each of these deeds and what they entail, the better prepared you will be with your future estate planning efforts.
The Lady Bird Deed
Also known as the Enhanced Life Estate Deed, the Lady Bird Deed was designed to help pass property on from one individual to the next, outside of probate. The Lady Bird Deed typically allows the grantor to maintain the right to keep the property, sell it, lease it or mortgage it and keep all proceeds of the property.
This enhanced life state arrangement can do a number of things, including:
- Allows for the transfer of the remaining interest on a piece of real estate
- Allows the current owner to reside in the property
- Allows the current owner to terminate the remaining interest on a property and transfer it to someone else
- Allows individuals to bypass gift tax
The Lady Bird Deed can be signed by an agent acting as a Power of Attorney. In most situations, if the grantor lacks mental capacity, it is best to use the Lady Bird Deed, instead of the Transfer on Death Deed.
Transfer on Death Deed
Much like the Lady Bird Deed, the Transfer on Death Deed is designed to avoid real estate recovery. However, the Transfer on Death Deed is relatively new, is untested in any published court opinions, and has some drawbacks the Lady Bird Deed does not.
- It may not be executed by an agent under a power of attorney.
- The beneficiary must survive the grantor by 120 hours. This is not the case with a Lady Bird Deed.
- A Transfer on Death Deed is subject to claims against the estate for two years after the death of the grantor.
Every situation is different, which is why there are situations where the Lady Bird Deed may be more desirable than a Transfer On Death Deed. Want to know which one is right for you? You can always speak to an attorney here at Hegwood Law Group by calling us at (281) 218-0880.