Life Estate Deed v. Enhanced Life Estate Deed

I am often asked by clients whether the Life Estate Deed and the Enhanced Life Estate Deed work the same way when it comes to transferring and owning property.  

The simple answer to this question is: No.  

Although both deeds sound similar in name, each has its own unique benefits and limitations.

Life Estate Deed

For instance, when you execute a Life Estate Deed naming a "life tenant" and a "remainderman", both the "life tenant" and "remainderman" have a vested interest in the property at the time the deed is executed.  

The "life tenant" may use the property during his or her lifetime, but owes a duty to the "remainderman" not to dispose of or otherwise destroy the property.  

View my other post on the Life Estate Deed for more information on how it works.

Unlike the Life Estate Deed, the Enhanced Life Estate Deed does not grant a vested interest in the property to the "remainderman" at the time the deed is executed. 

Enhanced Life Estate Deed

The owner of the property may dispose of the property at any time without the consent of the "remanderman."  

Read my other post on the Enhanced Life Estate Deed for more information on how it works.

Both deeds also contain certain similarities.  

The biggest similarity in the two deeds is that they are both designed to avoid probate by passing property to a remainderman without having to go through the court process.

Texas Enhanced Life Estate Deed

Texas is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away.  

In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away.

Florida Enhanced Life Estate Deed

Florida is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away.  In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away.

Unlike Beneficiary Deeds in other states, the Florida Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive.  This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive.  There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Texas Enhanced Life Estate Deed, Ohio Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.

Kansas Enhanced Life Estate Deed

Kansas is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away.  In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away. 

Unlike Beneficiary Deeds in other states, the Kansas Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive.  This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive.  There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Florida Enhanced Life Estate Deed, Texas Enhanced Life Estate Deed, and Ohio Enhanced Life Estate Deed.

What is a Life Estate Deed?

The short answer is a Life Estate Deed is a document that grants ownership of a parcel of real property to two separate parties: (1) the Life Tenant, and (2) the Remainderman.

The Life Tenant

The deed gives the Life Tenant complete use and ownership of the property for a certain period of time.

Creditors and the Lady Bird Deed

Does a Lady Bird Deed Protect My Property from Creditors of My Beneficiaries?
Yes.  A Lady Bird Deed does not transfer ownership of the property to your beneficiaries until you pass away.  This is different from other forms of transfer like the life estate, tenancy in common or joint tenancy with right of survivorship.  While you are alive, your beneficiaries' creditors cannot attach or satisfy any claims to your property.  A Lady Bird deed even allows you to remove a beneficiary if you find out that beneficiary has a creditor or creditors who would end up taking that beneficiary's portion of your property.

In states that recognize "tenancies by the entireties," Lady Bird deeds also protect married couples who own their home as husband and wife.

Alabama Life Estate Deed

Alabama Life Estate Deed
The Alabama Life Estate Deed is a document that grants ownership of a parcel of real property to two separate parties: (1) the Life Tenant, and (2) the Remainderman.

The Life Tenant
As in other states, the Alabama Life Estate Deed gives the Life Tenant complete use and ownership of the property for a certain period of time. That period of time is measured by the life of a natural person; usually the Life Tenant’s. In other words, if I am the Life Tenant and the time period is measured by my life then when I pass away the “life tenancy” automatically terminates. However, if the time period is measured by the life of my wife and my wife passes away before me the Life Estate automatically terminates upon her passing and I can legally be evicted from the property.

The Remainderman
When the Life Estate owned by the Life Tenant terminates, the Life Estate Deed transfers ownership of the property to the Remainderman. The Remainderman is the person or persons whose names are listed on the Life Estate Deed as a Remainderman. To officially transfer ownership, in most states the Remainderman need only record the death certificate of the person whose life was the measure of the Life Estate.

A Life Estate is different from an Enhanced Life Estate. You can read my other articles on the Enhanced Life Estate Deed and the standard Life Estate for a greater understanding of the differences.

Medicaid and the Lady Bird Deed

Does Medicaid Look at a Lady Bird Deed as a Divestment of Assets?
No.  In general, a patient who gratuitously transfers property to his or her children reserving a life estate, or transfers property into a joint tenancy or tenancy in common is subject to a Medicaid divestment penalty if the transfer occurs within 60 months from the date of the Medicaid application.  A Lady Bird Deed does not transfer ownership of the property at the time it is executed and may be used to avoid the divestment penalty.

The Difference Between the Enhanced Life Estate Deed, Warranty Deed and Quitclaim Deed

On June 19, I wrote an article explaining the benefits of the Enhanced Life Estate Deed. The article has quickly become one of my most popular reads. Professor Gerry W. Beyer of the Texas Tech University School of Law commented on my article in his post titled Lady Bird Deed. Other estate planning lawyers and professors have e-mailed me extolling the benefits of the Enhanced Life Estate Deed.

Enhanced Life Estate Deed, Ladybird Deed

One of my clients is an elderly widow. 

She recently contacted me with several concerns about her estate. Her primary concern was that she wanted to keep her home out of probate when she passes away. 

Like most people, she doesn't like the idea of her property being tied up in legal limbo for months before her beneficiaries (i.e. her daughter and two sons) take possession of the home.