A “ladybird” deed or deed with an “enhanced life estate” can be a very important part of a well drafted estate plan. What is a “ladybird” deed and should everyone have one?

A “ladybird” deed is a deed in which the owner of real estate conveys the real estate to him or herself for their lifetime, while reserving the right to sell or otherwise manage the real estate as they choose while they are living. The individual may not own the real estate when they pass away, but if they do, it passes directly to the individuals named on the deed to receive the real estate. This means that the real estate can be passed on to individuals without the need for probate. This can be especially important if an individual may, or is, receiving Medicaid benefits for long term nursing home care. It is similar to naming beneficiaries on a bank account. When you pass away, the account becomes the asset of the named beneficiary.

While this is a very powerful estate planning tool, it is not appropriate for all estate plans. In cases where an individual has a very large family or if a beneficiary has special needs, other alternatives should be considered. The use of “ladybird” deeds is one part of the discussion during a comprehensive estate planning consultation. If you would like to talk to an estate planning attorney regarding how a “ladybird” deed may work as part of your comprehensive estate plan, we would love to meet with you.