For a lot of people, their house is the most important thing that they own and the number one thing that they're concerned about passing on to an heir. If you know who you want to inherit your family home and want to avoid having the house go through probate, consider using a transfer-on-death or Lady Bird deed. Both also have possible benefits when it comes to Medicaid eligibility. Here's how they work.
These popular alternatives to living trusts (which can be expensive and troublesome to create) and joint tenancy (which gives your future heir equal control over the property even during your lifetime) are simple to execute and have the added benefit of going into effect immediately upon your death.
You maintain full control and ownership of the property as long as you are alive. You can even change your mind about who should inherit or sell the property. The house never goes into probate and isn't part of your willed assets, which means that the transfer cannot be contested the way that a will can. That's a handy feature if you suspect that there will be possible disputes among your heirs over your home.
Not all states have TOD deeds, although the increasing popularity of the measure has led more states to adopt the procedure in recent years, so check with an attorney who is familiar with the probate laws of your state to see if it is possible.
Lady Bird Deeds
A Lady Bird deed, which is also called an "enhanced life estate," offers another simple, inexpensive way to transfer the ownership of your house upon your death. It essentially allows you to transfer ownership of the property to your heir during your lifetime. However, you still remain in full control of the home. You even retain the right to sell the house, should you decide to do so.
Another benefit of a Lady Bird deed is that, if your intended heir should run into financial trouble, his or her debts can't be attached to the property as liens. You also have the option to change heirs, in order to keep the home out of collection proceedings, if the troubled heir can't get his or her finances in order.
Like TOD deeds, Lady Bird deeds are not available in all states, so you'll need to discuss the issue with an attorney who handles wills and estates planning, such as Donald B Linsky & Associate Pa.
One of the advantages of both systems is that they can help preserve your eligibility to Medicaid benefits without having to worry that your home will eventually be taken by the state to recover any money paid for your medical care. Many seniors find themselves in a bind: the value of their home is excludable as long as they remain living in the home, but the house will likely end up sold after their death in order to meet the requirements of Medicaid Estate Recovery programs.
However, both TOD deeds and Lady Bird deeds avoid having the house ever become part of the estate. Since it never enters into probate, the house is often excludable from recovery procedures. This can allow you to receive Medicaid benefits without worrying that your heirs will lose your home after your death.
Again, whether or not this is the case in your state is something that you want to explore with the help of an attorney. Each state has its own procedures, and some are more extensive than others.Share
10 May 2016
Like many people, I once found learning about law very intimidating. My brother went to law school and I remember glancing through a few of his books and wondering if I was actually reading English due to all of the legal jargon in them! However, when I ended up in a sticky legal situation due to accidentally breaking a small law I didn't know existed, I realized that I needed to learn more about the law, so I could make sure to follow it precisely in the future. My brother helped to break down some complicated legal concepts to me, and I have since been studying up online. I want to post what I have learned and continue to learn about law in the future on my new blog, so my knowledge cannot only help myself, but also help others!