Life Estate Deed

If you are the owner of a property and want the ownership to be transferred automatically to your beneficiaries after your death, without the need of a probate, you can use a life estate deed. Life estate deed gives you the custody of the property for your lifetime, and upon your death, the remainder (what is left after your life estate terminates) will pass to your heir. It is a very good way of estate planning. Apart from the traditional Life estate deed, some states also allow you to have an Enhanced Life estate deed.

Enhanced Life Estate Deed

Enhanced life estate deed is a nickname for "Lady Bird" deed. It is named after the former First Lady of the United States, Claudia Alta Johnson aka Lady Bird as it is believed that President Johnson once used this deed to transfer some land to Lady Bird. With an Enhanced life estate deed, one can transfer the remainder to an heir or to revocable trust that would allow greater control of the property in case of death. Enhanced life estate deed is only available in few states in US namely Florida, Texas, Ohio, California, and Kansas. The advantage Enhanced life estate deed has over the traditional life estate deed is that it in case you change your mind, and want to sell off the property before your death, you do not need any consent from the heirs.

Advantages of Life Estate Deed

1. Life estate deed is one of the most cost-effective way of securing your property in the name of your heirs. The process of establishing this deal is also very simple, with only the present owner(s) required to sign a new Deed. The total cost of life estate deed varies between $275-$300.
2. As mentioned earlier, one of the most important benefits of life estate deed is that upon the death of the owner, the property automatically passes over to the nominated heirs, which helps in avoiding probate.
3. The heir to whom the property is to be passed to after the death of the owner, cannot claim the property for difficulties like bankruptcy, lawsuits, accidents etc.
4. If the real estate is not sold by the owner until his death, the heirs get the full benefits of a stepped up income taxes for capital gains purposes.
5. It helps for purposes of Medicaid eligibility and protection from Medicaid recovery by the state.

Sample Life Estate Deed

This Deed is made on this day of _______________, 20__, between the Grantor ___________ ___________________ of address __________________________________________________ and the Grantee ______________________________ of address _________________________ _________________________. WITNESSETH, That the Grantor, for good and valuable consideration paid by the Grantee, the receipt of which is hereby acknowledged, does grant, sell and convey unto the said Grantee, all the rights, title, interest, claim or demand that the Grantor may have in the following described real property: Property Address: Legal Description: EXPRESSLY RESERVING Life Estate in the above described property unto the Grantor and its assigns. The Grantor shall have full ownership, possession and use of the property, as well as the rents, revenues and profits generated by the property during the term of the Grantor's natural life. Upon the expiration of the Grantor's natural life, the ownership, possession, use, rents, revenues and profits of the above described property shall revert to the Grantee. EXECUTED this day of _______________, 20__. Grantor Name: Grantor Signature: STATE OF COUNTY OF On this day, personally appeared before me, _________________________, to me known to be the person(s) described in and who executed the within instrument, and acknowledged that he/she signed the same as his/her voluntary act and deed, for the uses and purposes therein mentioned. Witness my hand and official seal hereto affixed on this day of _______________, 20__. Notary's Public Signature: ______________________ My commission expires _______________.

(Life Estate deed forms may vary from state to state)

Home is one of the largest assets for many people. Transferring full ownership to your heirs while you are still alive, places your right and security of the home at risk. Life estate deed provides the middle way out for transferring ownership in a very simplistic and easy way. I hope this article will help you in knowing what is a life estate deed and its benefits.