The difference between an ordinary life estate deed and an enhanced life estate deed
Attorney Tom Olsen: Chrissy, I got an email from somebody last week, and they were talking about mom's home. Mom is still alive, and what's going to happen to mom's home when mom passes away. The first thing they told me was that mom had signed a life estate deed that stated when mom passes away, her home will automatically go to son and daughter, no probate required. I thought it'd be a good time for you and me to discuss the difference between an ordinary life estate deed and an enhanced life estate deed, also known as a ladybird deed.
This is an issue that we've seen before, and this is where the distinction becomes important. Because an ordinary life estate deed, once you do it, it is written in stone. It cannot be changed at a later date without your children's knowledge, signature, and consent. With an enhanced life estate deed, also known as a ladybird deed, and by the way, other states have similar type deeds and they might call them something different-
Attorney Chris Merrill: Correct.
Tom: -but with them, you reserve the right to change your mind at a later date without your children's knowledge, signature, and consent. Here's why this is important to this lady who texted me. This is a daughter. She says, Tom, my brother is being taken advantage of. He's being scammed financially. He's completely irresponsible with money. If we pass away and he inherits one-half of mom's home, it's just going to all go to waste, go down a drain, be spent, be lost, be scammed out of.
Mom now wants to say, hey, when I pass away, I don't want my son to get one-half of my home outright. I want him to get one-half, my son, in trust that the home would be sold. His share of the proceeds would be managed in trust, would be used to help him pay his rent, pay his phone, pay his car, but not given to him in one lump sum.
Of course, I tell the lady who emailed me, I said, "That is a great plan, I love that plan, but it is completely contingent-"
Chrissy: On him agreeing and signing.
Tom: "-on brother agreeing to convey his interest back to mom." She gets it, and she goes, "Well, can we go forward with mom's estate planning?" I said, "Look, we need to do this in two steps. Let's not even bother doing setting up this trust for mom the way she hopes it will be and dreams it will be." We had to start with step number one and that is, will brother sign this deed?
Chrissy: Exactly.
Tom: Yes. Of course, she said, "Well, can you sign it at home?" I go, "Well, the deed needs to be witnessed and notarized, so it'd be best if he'd come down to my office." Where are we right now with this? She's going to check in with her brother and see if he'd be willing to do this. By the way, she, the daughter as well, would deed her life estate back to mom. We're basically putting the mom's home back in mom's name only, which is the way most people want it anyway, but we'll see. We'll see if he will agree to such a thing.
Chrissy: Keep us posted. What you're saying, though, is that's an example of a situation where an ordinary life estate deed, although will avoid probate, however, now when mom wants to do the right thing and make a change, it's still going to the kids, but she wants to structure it in a different way. It requires the knowledge, signature, and consent of everybody.
Tom: Exactly. What we're saying is a life estate deed is a powerful tool for avoiding probate. An enhanced life estate deed is a powerful tool for avoiding probate and maintaining complete control over your piece of property. If we do an enhanced life estate deed for you today, and six months from now you want to sell your home, refinance your home, change who gets it when you pass away, you're going to be able to do so without your children's knowledge, signature, and consent.
Chrissy: Correct.
Tom: While we're on that point, I just want to point out the other situation. I've run across this before, and it went something like this. A lady called me on the radio show, just like now, and she goes, "Tom, years ago before I met you or knew of you, I did an ordinary life estate deed. It states that when I pass away, my home will automatically go to my daughter. No probate required. Now I've gotten remarried. My new husband wants to sell his home. I want to sell my home. I called my daughter up and said to sell my home, I need your signature. Will you sign? She said--"
Chrissy: No.
Tom: Daughter said no because--
Chrissy: Because I would be losing it. In other words, there's not a guarantee. She's not [crosstalk]--
Tom: Yes, the daughter is thinking, "Hey, if I don't sign, then someday I'm guaranteed to inherit mom's home. If I do sign, mom's going to sell it. Who knows what's going to happen to the sale proceeds from there." The lesson to be learned there is that a life estate deed, a powerful tool for avoiding probate. Enhanced life estate deed, powerful tool for maintaining complete control of your property.
Folks, we have free booklets on enhanced life estate deeds. We'd be happy to mail you one. Just call the Olsen Law Group anytime at 407-423-5561, and we'll get that in the mail to you. Everybody, my name is Tom Olsen. The name of the show is Olsen on Law. You're listening to NewsRadio WFLA.