is a lady bird deed legal in north carolina

A Lady Bird

Deed is really the best of both worlds. States such as Georgia and South Carolina, however, do not allow Lady Bird Deeds. At this point in time, they are allowable in North Carolina and this is a very good way, especially in an emergency situation, to transfer assets.

Full Answer

Does North Carolina offer Lady Bird deeds?

North Carolina is one of a handful of states that allows individuals to use Ladybird Deeds to protect their personal residence. But what is a Ladybird Deed anyway, and how do you know if you need one? One of the best ways to explain a Ladybird Deed is to use a simple hypothetical. The Story of Bill and Mary Bill and Mary are an elderly couple.

Is a Lady Bird deed legal in North Carolina?

States such as Georgia and South Carolina, however, do not allow Lady Bird Deeds. At this point in time, they are allowable in North Carolina and this is a very good way, especially in an emergency situation, to transfer assets. There is a possibility in the future that the policy will change but that is always a possibility.

How to revoke a Lady Bird deed?

• The right to a life estate in the property, including rights to use, possess and collect income from it for life;
• The right to sell the property and keep the proceeds;
• The right to mortgage the property and to use the equity for yourself; and
• The right to revoke or amend the deed.

Is a ladybird deed legal is NC?

Thus, they declare that NC doesn’t allow the Ladybird Deed. The problem is: we don’t have a statute for the Ladybird Deed. In fact, most of our property law in NC is not codified in statute. Our property law is predominantly derived from common law or judge made law (also known as “legal precedent”).

What are the drawbacks of a ladybird deed?

A Ladybird Deed is not without its drawbacks, including:Confusion – Banks and title companies may not understand the non-vested nature of the remainder interest and require that the remaindermen join in a conveyance or a mortgage.Creditors.More items...

Is a Lady Bird deed better than a trust?

If your primary home constitutes most of your net worth, the Lady Bird deed cost will be much less than the cost of having a revocable trust created. If you have a significant amount of property of any type in addition to your primary home, a revocable trust may be a better way to go. Lady Bird deed vs. will.

What is the advantage of a ladybird deed?

Medicaid Asset Protection A Lady Bird deed can also help you when you apply for Medicaid, as it allows you to transfer property rights and maintain control of the property. The deed can keep assets in the family that would, under other conditions, be taken by the state.

What is a ladybug deed?

A lady bird deed is an estate planning tool that enables a Medicaid beneficiary to protect their home as an inheritance from their state's Medicaid Estate Recovery Program. \ A lady bird (ladybird) deed goes by a variety of names, including an enhanced life estate deed, lady bird trust, and a transfer on death deed.

Does ladybird deed avoid inheritance tax?

The Lady Bird deed also provides added tax benefits. For example: You are not subject to gift tax since the property does not actually transfer title to your beneficiaries during your lifetime.

What is the difference between a ladybird deed and a revocable trust?

Revocable trusts are similar to lady bird deeds in that they both offer significant amounts of control while the original owner is still alive. However, as third parties usually manage revocable trusts, owners tend to exert less direct control over the assets.

What happens when one person on a deed dies?

When one of them dies, the remaining owner automatically owns the whole of the property. This is the case, even if the deceased left a Will leaving all of their assets to someone else, because a joint tenancy interest in a property passes by the Right of Survivorship and not via a Will.

Can a beneficiary stop the sale of a property?

While the Executor will make the final decision on this, they still have a duty to sell the house for market value. If it's sold for less, then Beneficiaries have the right to challenge this. If beneficiaries believe an Executor is acting improperly, they can apply to get them removed as Executor of the Will.

Do I need probate to sell my mother's house?

If the deceased owned a property in their sole name Probate will generally be needed before it can be sold or transferred. If Probate is needed, the property can be put on the market and an offer can be accepted before the Grant of Probate has been obtained, but the sale won't be able to complete without the Grant.

What are the pros and cons of a Lady Bird deed in Florida?

ADVANTAGESAvoids Probate. The single biggest advantage to securing a Lady Bird Deed in Florida is that, after your death, your estate can avoid probate.Does Not Affect Medicaid Eligibility. ... Current Owner Remains Eligible for the Homestead Exemption. ... Less Expensive. ... Delayed Documentary Stamp Taxes. ... Capital Gains Taxes.

What are the disadvantages of a Lady Bird deed in Florida?

The several disadvantages to lady bird deeds in Florida include:Lack of Asset Protection. A creditor may be able to place a lien or levy on the remainder interest in the lady bird deed.Ineffectiveness Against Florida Constitutional Restrictions. ... Unexpected Deaths. ... Changes to the Estate Plan.

What is a revocable trust?

A revocable trust is a trust whereby provisions can be altered or canceled dependent on the grantor or the originator of the trust. During the life of the trust, income earned is distributed to the grantor, and only after death does property transfer to the beneficiaries of the trust.

Does North Carolina allow Lady Bird deeds?

A Lady Bird Deed is really the best of both worlds.States such as Georgia and South Carolina, however, do not allow Lady Bird Deeds. At this point...

Does a Lady Bird deed supercede a will?

This right to rescind is what distinguishes a Lady Bird Deed from a standard Life Estate Deed.A properly written, signed and filed Enhanced Life Es...

Does a ladybird deed avoid probate?

A Lady Bird deed avoids probate, so the home is not part of the probate estate and Medicaid cannot go after it.

What states recognize Ladybird deeds?

At the time of this writing, the following states allow lady bird deeds: Florida, Michigan, Texas, Vermont, and West Virginia.

Does a Lady Bird deed have to be recorded?

It only applies to residential properties and must be promptly recorded after it is notarized. This document is exempt from documentary transfer ta...

Does NC recognize Ladybird deeds?

North Carolina is one of a handful of states that allows individuals to use Ladybird Deeds to protect their personal residence.

What is a lady bird deed?

A lady bird (ladybird) deed (also called an enhanced life estate deed, lady bird trust or a transfer on death deed) is a type of life estate deed. In simple terms, a life estate is a form of co-ownership in a piece of property, and a deed is a document that legally transfers the property from one owner to another.

Which states allow lady bird deeds?

At the time of this writing, the following states allow lady bird deeds: Florida, Michigan, Texas, Vermont, and West Virginia.

What is the asset limit for a lady bird deed?

In order to be financially eligible for long-term care Medicaid, assets are limited. While the limit varies by state, generally speaking, the asset limit is $2,000 for a single applicant. ( See asset limits by state here ). If a Medicaid applicant is over the asset limit, the excess assets must be “ spent down ” in order to meet the limit.

Why do people use lady bird deeds?

However, lady bird deeds protect one’s home from estate recovery. This is because they allow persons to automatically transfer property (in the case of a Medicaid recipient, their home) upon their death without it going through probate. (Probate is a court process in which the property of a deceased person is transferred to his or her ...

Can a life tenant cancel a deed?

In fact, the life tenant is even able to cancel the deed or change the beneficiary. Stated clearly, the beneficiary will receive the title of the home after the death of the homeowner, but he / she but has no right to the home (or decisions made in regards to the home) as long as the homeowner is alive. Important: Lady bird deeds are an estate ...

Is there a penalty for a life estate deed?

Therefore, there is no penalty for establishing this type of life estate deed. Caution: The creation of a traditional life estate deed is considered to be a violation of Medicaid’s look-back period. This can result in a penalty of Medicaid disqualification for a period of time.

Do traditional life estate deeds violate the look back rule?

Traditional life estate deeds violate Medicaid’s look-back rule because the beneficiary immediately has ownership rights, and therefore, it is considered a gift. On the other hand, lady bird deeds do not violate the look-back rule. This is because the Medicaid recipient maintains ownership of the home during his / her life and ...

What is a lady bird deed?

It is also known as a Lady Bird Deed. Grantors conveys the property to Grantees subject to an enhanced retained life estate. The Grantors, and each of them, retain the right to sell, encumber, mortgage or otherwise impair the interest Grantees might receive in the future, without joinder or notice to Grantees, with the exception ...

Which states allow lady bird deeds?

At the time of this writing, the following states allow lady bird deeds: Florida, Michigan, Texas, Vermont, and West Virginia.

Does a ladybird deed avoid probate?

A Lady Bird deed avoids probate, so the home is not part of the probate estate and Medicaid cannot go after it.

Does NC recognize Ladybird deeds?

North Carolina is one of a handful of states that allows individuals to use Ladybird Deeds to protect their personal residence.

Can you get a lady bird deed in North Carolina?

A Lady Bird Deed is really the best of both worlds.States such as Georgia and South Carolina, however, do not allow Lady Bird Deeds. At this point in time, they are allowable in North Carolina and this is a very good way, especially in an emergency situation, to transfer assets.

Does a Lady Bird deed supercede a will?

This right to rescind is what distinguishes a Lady Bird Deed from a standard Life Estate Deed.A properly written, signed and filed Enhanced Life Estate Deed does supersede the terms of the owner's Will, so long as the grantor has not exercised the retained right to reclaim ownership while living.

1 attorney answer

Actually NC is still one of a few states that still allows the lady bird deed.

Kenneth Love Jr

Actually NC is still one of a few states that still allows the lady bird deed.

Why are they called Lady Bird Deeds?

I love these deeds because they can accomplish lots quickly. Why are they called Lady Bird Deeds? They get their name from Lady Bird Johnson, the wife of President Lyndon B. Johnson, the commander-in-chief originally responsible for implementing Medicaid.

What is a life estate deed?

Life estate deeds allow you to give away a future interest in property. You retain what’s called a life estate or a life interest in that property which allows you to sell or mortgage said life interest. However, it is a very limited interest.

Can you transfer a lady bird deed to Medicaid?

However, Lady Bird Deeds are a simple way to transfer property and still qualify for Medicaid , while not allowing a Medicaid lien to be placed against your property. So, what should you do? By doing nothing, you risk losing your home that you have worked for. Some people have worked to pay off their home for 30+ years, meaning you have put a lot of time and energy into this property.

Can you give away a home for Medicaid?

A Medicaid lien will not attach to the property but because you’ve retained control of it, and it is not a countable asset transfer that will give you a penalty for time to qualify for Medicaid or otherwise deny you eligibility for Medicaid. You can literally give away the home and any surrounding contiguous property, which means property that is not separated by boundaries then go and apply for Medicaid the next day.

Is a life estate deed a transfer?

This means life estate deeds are very limited. Also, life estate deeds do count as a transfer of assets and that would stick you with a penalty or prevent you from drawing Medicaid.

Can you give away a house in North Carolina?

You can literally give away the home and any surrounding contiguous property, which means property that is not separated by boundaries then go and apply for Medicaid the next day. This works very well in North Carolina right now. States such as Georgia and South Carolina, however, do not allow Lady Bird Deeds.

Do life estate deeds count as assets?

Also, life estate deeds do count as a transfer of assets and that would stick you with a penalty or prevent you from drawing Medicaid. You would later have to void that transfer or re-transfer the property back to yourself to be able to qualify for Medicaid. A Lady Bird Deed is really the best of both worlds.

Why are lady bird deeds only available in 5 states?

Given the benefits of lady bird deeds, one may ask why they are only available in five states. The answer has to do with title insurance. Title insurance is an essential part of most real estate transactions. If a title insurance company will not insure title, then the deed will create costly title issues that require corrective legal action.

Which states recognize lady bird deeds?

Each state that recognizes lady bird deeds— Florida, Texas, Michigan, Vermont, and West Virginia —has its own requirements for validity.

What is a deed named after?

Some deeds—like quitclaim deeds, special warranty deeds, and warranty deeds —are named after the warranty of title they provide. Others—like lady bird deeds, life estate deeds, and transfer-on-death deeds —are named after the probate avoidance feature.

How does a lady bird deed work?

How Lady Bird Deeds Work. Like regular life estate deeds, lady bird deeds work by dividing ownership of real estate into different time periods. A person who creates a lady bird deed transfers property to himself for his lifetime. This creates a life estate in the original owner, who is called a life tenant. A lady bird deed also names one ...

What are the benefits of a lady bird deed?

Benefits of Lady Bird Deeds. Lady bird deeds have several features that make them popular estate planning tools. Probate Avoidance. Probate is a court-supervised legal proceeding for transferring a deceased owner’s property to his or her heirs. Lady bird deeds avoid probate. By transferring the property automatically at the deceased owner’s death, ...

What is retained control deed?

Lady bird deeds allow the original owner/life tenant to change his or her mind without responsibility to—or involvement of—the remainder beneficiaries. If the original owner/life tenant decides that she wants to sell the property or give it to someone else, she may do so. The remainder beneficiaries have no veto power or other decision-making ability while the original owner/life tenant is still alive.

What does a lady bird deed do?

By transferring the property automatically at the deceased owner’s death, lady bird deeds remove the property from his or her probate estate. This removes the property from the jurisdiction of the probate court.

What Are the Disadvantages of a Ladybird Deed?

While you may not envision selling your home in the future, we can tell you from our experience, that it often becomes an issue down the road. Here's how it has played out with past clients: At some point there is a health decline and the client is no longer able to live independently. The client moves into a into an independent living community, assisted living community, or skilled-nursing facility and the home is left sitting vacant. The adult children don't have the time, money, or energy to maintain the home while also taking care of their parent and their home family and they eventually come back to us wanting to sell the home and we have to remind them that if the home is sold, the proceeds will potentially be countable for Medicaid-eligibility purposes.

What is an Enhanced Life Estate Deed?

A traditional life estate is when a person transfers their property to someone else (referred to as the “remainderman”), but retains the right to live there for the remainder of their lifetime. For example, a parent might transfer their home to their child, but the parent retains the right to live in the home for the remainder of the parent’s lifetime. The problem with a traditional life estate is that if the parent later changes their mind and wants to recover or sell the property, the parent cannot do so without the child’s agreement. In addition, if the property is sold, the proceeds from the sale must be divided between the parent and the child based upon the parent’s actuarial life expectancy. A traditional life estate also constitutes a penalized transfer for Medicaid purposes that is subject to the 5-year Medicaid look-back period.

Is Medicaid a federal law?

Medicaid is Federal law implemented by the states. This means that we need to pay close attention to both State and Federal laws and trends. Currently, North Carolina Medicaid Estate Recovery is limited to the Medicaid-recipient’s probate estate. Because enhanced life estate deeds are not part of the probate estate, ...

What Is a Lady Bird Deed?

An "enhanced life estate deed ," commonly called a Lady Bird deed, has only been approved in a few states. To understand the unique qualities of a Lady Bird deed, first it is necessary to understand a traditional life estate.

What is the drawback of a lady bird deed?

A major drawback to a traditional life estate is that the grantor gives up the right to sell or mortgage the property. A Lady Bird deed also allows the grantor to live on the property until their death and then transfers it to the grantee. What makes a Lady Bird deed different is that the grantor retains the right to sell or mortgage the property.

What is a TOD deed?

Approximately half of the U.S. states have what is called a transfer on death (TOD) or beneficiary deed, which is similar to, and may be preferable to, a Lady Bird deed. TOD deeds designate a beneficiary upon the grantor's death, in the same way a bank account can have a designated beneficiary.

What is a grantor's interest in a deed called?

The grantor's interest is called a life estate , and the grantee's interest is called a contingent remainder. A Lady Bird deed form contains a provision to the effect that the life estate is "coupled with an unrestricted power to convey during the Grantor's lifetime.". However, it is important to be sure the deed complies with state law.

What is the meaning of "cancelling deed"?

Being able to sell or mortgage the property, or outright cancel the deed. Being able to qualify for Medicaid benefits for long-term care. Retaining the state homestead rights and property tax limitations. Avoiding federal gift tax.

Is a lady bird deed good?

A Lady Bird deed may not be a good idea in the following situations: If you plan to apply for a mortgage on the property, some title insurance companies may be reluctant to provide title insurance on property subject to a Lady Bird deed. You want to leave the property to more than one grantee.

Can you use a lady bird deed for Medicaid?

This does not happen if you use a Lady Bird deed, because it is not considered to be a transfer. When a Medicaid recipient dies, Medicaid may make a claim against the person's probate estate to recover the benefits paid. A Lady Bird deed avoids probate, so the home is not part of the probate estate and Medicaid cannot go after it.

Why do you need a lady bird deed?

There's another Medicare-related reason to use a Lady Bird deed, which helps your family members after your death. If you receive Medicaid benefits during your life, then after your death, the state will make a claim for repayment from the assets you leave behind. Federal law requires every state to have such a Medicaid "estate recovery" program.

Why is the Johnson deed called Lady Bird?

Finally, if you're wondering how the deed got its odd name, it's not because President Lyndon Johnson ever used this kind of deed to transfer property to his wife, Lady Bird. According to Texas Tech law professor Gerry Beyer, the Florida lawyer who created the deed in the 1980s used the names of the Johnson family in an example showing how the deed worked—and the name stuck.

What is an enhanced life estate deed?

By contrast, an enhanced life estate deed (the Lady Bird deed ), lets you: avoid probate of the property. keep the right to use and profit from the property for your lifetime. keep the right to sell the property at any time. avoid making a gift that might be subject to federal gift tax. avoid jeopardizing your eligibility for Medicaid.

What happens if you leave your property in a way that doesn't go through probate?

If you leave your property in a way that doesn't go through probate, and your state doesn 't seek reimbursement from nonprobate assets, then your family will get to inherit your property without repaying the government for the benefits you received.

Can you get Medicare with a lady bird deed?

In states that specifically authorize transfer-on-death deeds, that may be a simpler and more readily accepted way to avoid probate and also get the Medicare-related benefits of a Lady Bird deed.

Can you transfer a house without probate?

If you're shopping around for a way to avoid probate for your house or other real estate, you may run across something called a "Lady Bird" deed. It offers a simple, inexpensive way to transfer real estate at your death, without probate.

Can you name a beneficiary on a life estate deed?

With a standard life estate deed, you could name a beneficiary to inherit your property while you keep ownership of it for your lifetime, but with significant restrictions. You wouldn't have the right to sell or mortgage the property, and you might also be liable to the beneficiary you named if you greatly decreased the value of the property—for example, let a house fall into serious disrepair.