If you hire an estate planning attorney, one of their top priorities should concern probate. You want to ensure they draft documents that allow your loved ones to bypass probate court once you pass. This way, they can avoid lengthy court proceedings and expensive fees associated with the process. However, in many cases, your legal options may prove costly and complicated. In other situations, they leave you with less control over your assets while you are alive. If you want estate planning tools that are more cost-effective and allow you to have more control over your assets while you are alive, then a lady bird deed or transfer on death deed may be for you.
What is a Lady Bird Deed?
A deed is a document that helps you transfer real estate from one party to another. This document outlines a description of the property, names the person who is granting it, and designates the person who is receiving it.
In Texas, a lady bird deed is also called an enhanced life estate deed. This deed is specifically used to transfer property from one person to another at the time of the owner’s death without needing to go through probate court.
Unlike traditional life estate deeds, lady bird deeds allow you the flexibility to:
- Sell, gift, or use the property without needing legal permission from the beneficiary
- Change the beneficiary
- Cancel the deed altogether
A traditional life estate deed leaves you with significantly less control over your property while you are still alive, which can cause problems for you if you wish to make changes to the original arrangement.
What is a Transfer on Death Deed (TODD)?
At the time of your death, transfer on death deeds will allow you to transfer your property to someone else without them needing to go through probate court. Similar to a lady bird deed, TODDs leave you with more control over your property. You will be able to cancel the deed, create a new one, switch beneficiaries, and use the property as you wish without asking for permission from the beneficiary.
Lady Bird Deeds vs. TODDs
Both estate planning tools will afford you flexibility in how you use your real estate and who receives it once you are gone. However, there are a few important distinctions that may affect which deed your attorney drafts:
- If you are incapacitated and designate a Power of Attorney, your POA will be able to sign a lady bird deed on your behalf. But a POA or other representative cannot sign a TODD for you.
- For a TODD to be legally valid, you need to get it signed, notarized, and recorded within the appropriate property records. Lady bird deeds do not need to be recorded.
- Under a TODD, the person who receives your real estate needs to survive you by 120 hours — 5 days. Otherwise, the property passes through your estate. Lady bird deeds do not have this survival requirement.
The Right Estate Planning Tools For You
In most cases, distributing assets through probate court can take years even when an estate is modest. With the proper estate planning documents, you can save your loved ones the costs and stress of court proceedings after you pass.
A knowledgeable estate planning attorney in Texas can guide you down the right path and help you choose a deed that is right for your unique situation. Book a consultation with Whitney L. Thompson, Esq. at (979) 318-5079 today.