LADY BIRD DEEDS

  • The Lady Bird Deed acquired its name after President Lyndon B. Johnson’s use of it to convey property to his wife, Lady Bird Johnson.
  • A primary objective of using Lady Bird Deeds is to avoid Probate of real estate.
  • What makes the Lady Bird Deed unique is its language.
  • If the owners do not dispose of the property before their death, the beneficiary named as the default in the deed will have title to the property.
  • Upon the Owner’s death the ownership of the property is effectively transferred to the default beneficiary and avoids Probate.
  • When the default beneficiary receives the property at Grantor’s death, it is included in the Grantor’s gross estate and thus receives a step-up basis.
  • Property taxes are not uncapped when the Lady Bird Deed is recorded.
  • A Lady Bird Deed does not provide the default beneficiary with rights of immediate ownership in the property, nor can a beneficiary’s creditor make a claim to the property.
  • This provides estate planning flexibility because the Grantor can also change their mind regarding whether certain persons should inherit the property outright, in trust or not at all since they retain their present ownership rights.

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