[ijusluvit]

Why do so many attorneys recommend forming a trust as the best or only way to protect your home from probate, and/or unreasonable delays in the transfer of ownership to your heirs after death?

I can only conclude, as does my attorney, that trusts are simply more lucrative for the attorney, since they cost thousands of dollars. Can anyone tell me any advantage that a trust has over a 'Ladybird deed'?

The 'Ladybird deed' was originated by President Johnson's advisors to insure the easy transfer of a number of his wife's properties to her heirs. My attorney developed and officially filed this deed modification for a total cost of just over $200. It automatically transfers ownership of our Florida home to a surviving spouse, or to our heirs as named in our ordinary will. No state or local agency can interfere in any way or delay this transfer.

Again, why would I want a trust?

[ijusluvit]

I'd still like to see a comment or two, especially from an attorney.

[Dcljake]

I was not familiar with a Ladybird Trust and live in a state that does not recognize them so I looked it. Very interesting. My Mother had a trust and when she passed away all assets went to the next named trustee. The Ladybird Trust seems to take care of your house, but what about other accounts and investments? I guess you an put everything in joint account with your named heir, but you are giving them access to everything while you are alive.

[Tickled_pink]

Originally Posted by Dcljake

I was not familiar with a Ladybird Trust and live in a state that does not recognize them so I looked it. Very interesting. My Mother had a trust and when she passed away all assets went to the next named trustee. The Ladybird Trust seems to take care of your house, but what about other accounts and investments? I guess you an put everything in joint account with your named heir, but you are giving them access to everything while you are alive.

Why not just name your heirs as beneficiaries or POD (Payable on Death) on your other accounts and investments?

[jimbo2012]

A Lady Bird deed may be a good idea if you think you might need Medicaid, the joint state-federal program that helps many Americans with nursing home costs. It may help preserve your eligibility for Medicaid and keep assets in the family that otherwise would be taken by the state to repay the cost of Medicaid benefits you receive during your life.

These deeds have some drawbacks, however, and they are used only in a few states.
How a Lady Bird Deed Works

These deeds are also called “enhanced life estate” deeds. 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.

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
in some states, prevent the property from being sold, after your death, to repay the cost of Medicaid benefits you received

Medicaid Eligibility

Medicaid benefits are intended for people who can’t otherwise pay for their medical care. So if you apply for benefits, you must say how much money and property you have. Some assets, however, aren’t counted for purposes of Medicaid eligibility. Typically, your primary residence isn’t counted when Medicaid adds up the value of your resources. It may be completely exempt, or exempt up to a certain value. For example, if your state exempts residences up to $750,000, then any value above that amount will be counted as a resource belonging to you.

When you apply for benefits, you must also disclose any assets you’ve given away in the previous few years, called the “look-back” period. Otherwise, people could simply give away their valuable assets to family members, claim poverty, and receive Medicaid benefits. If you’ve given away valuable property, it may disqualify you from receiving benefits for a certain period of time.

For example, if you had transferred your house to your daughter within the look-back period, it could make you ineligible for benefits. If, however, you had executed only a Lady Bird deed, it wouldn’t be considered a transfer that you had to disclose to Medicaid. That’s because you keep complete control over the property. So if your state doesn’t count the value of your residence for purposes of Medicaid eligibility, your continuing ownership won’t make you ineligible for benefits.

The Drawbacks:

Complications may arise when there are multiple owners or multiple beneficiaries.

The deeded property remains in the owner's estate for estate tax purposes.

If the deed is recorded, it reveals publicly who will receive the property at death.

The life tenant could mortgage, encumber, or convey the property before the beneficiary receives it.

The beneficiary could predecease the life tenant and a title company could require probate of the beneficiary's estate by interpreting the remainder interest as being vested subject to divestment.

The life tenant could predecease the remainderman causing judgments against the remainderman to attach to the property.

In the absence of case law or statutes in certain jurisdictions, title companies may not answer specific issues, leaving unresolved questions

.

[jimbo2012]

You can do it your self, here's the form and just record it.

Lady Bird Deed

This Deed is made on this day of _______________, 20__, between the Grantor ___________
___________________ of address __________________________________________________ and the Grantee Beneficiary ______________________________ of address _______________
___________________________________.

For good and valuable consideration paid by the Grantee Beneficiary, the receipt of which is hereby acknowledged, the Grantor does transfer and convey the following described property to the Grantee Beneficiary effective on the Grantor's death:

Property Address: __________________________________________________ ____________

Legal Description: __________________________________________________ ____________
__________________________________________________ ___________________________
__________________________________________________ ___________________________

The Grantor reserves a life estate for himself/herself during the Grantor's lifetime coupled with an unrestricted power to convey during the Grantor's lifetime, which includes the power to sell, gift, mortgage, lease and otherwise dispose of the property, and to retain the proceeds from the conveyance.

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 _______________.

----------------------

But knowing how inexpensive lawyers are around here I would have them do it.

[NECHFalcon68]

Originally Posted by jimbo2012

A Lady Bird deed may be a good idea if you think you might need Medicaid, the joint state-federal program that helps many Americans with nursing home costs. It may help preserve your eligibility for Medicaid and keep assets in the family that otherwise would be taken by the state to repay the cost of Medicaid benefits you receive during your life.

These deeds have some drawbacks, however, and they are used only in a few states.
How a Lady Bird Deed Works

These deeds are also called “enhanced life estate” deeds. 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.



.

Not sure of this...we have a ladybird deed and our "beneficiary" has no rights to the property while we are both alive, nor can they inhibit any actions on the property such as refinance, sale, etc. Absolutely no restrictions on our power to own the property.

[billethkid]

we hadall our estate and tax plans, ordinary wills, power of attorneys and living wills all orchestrated via a trust with my wife and I as trustees and kids as co-trustees for a lot less than "thousands of dollars"......several years ago....unless pricing has changed that much since.

I also suggest using attorneys that specialize in this type law or firms that have such a specialist.

btk

[jblum315]

I did the same as Bill and certainly didn't cost "thousands of dollars."

[ijusluvit]

Originally Posted by jimbo2012

A Lady Bird deed may be a good idea if you think you might need Medicaid, the joint state-federal program that helps many Americans with nursing home costs. It may help preserve your eligibility for Medicaid and keep assets in the family that otherwise would be taken by the state to repay the cost of Medicaid benefits you receive during your life.

These deeds have some drawbacks, however, and they are used only in a few states.
How a Lady Bird Deed Works

These deeds are also called “enhanced life estate” deeds. 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.

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
in some states, prevent the property from being sold, after your death, to repay the cost of Medicaid benefits you received

Medicaid Eligibility

Medicaid benefits are intended for people who can’t otherwise pay for their medical care. So if you apply for benefits, you must say how much money and property you have. Some assets, however, aren’t counted for purposes of Medicaid eligibility. Typically, your primary residence isn’t counted when Medicaid adds up the value of your resources. It may be completely exempt, or exempt up to a certain value. For example, if your state exempts residences up to $750,000, then any value above that amount will be counted as a resource belonging to you.

When you apply for benefits, you must also disclose any assets you’ve given away in the previous few years, called the “look-back” period. Otherwise, people could simply give away their valuable assets to family members, claim poverty, and receive Medicaid benefits. If you’ve given away valuable property, it may disqualify you from receiving benefits for a certain period of time.

For example, if you had transferred your house to your daughter within the look-back period, it could make you ineligible for benefits. If, however, you had executed only a Lady Bird deed, it wouldn’t be considered a transfer that you had to disclose to Medicaid. That’s because you keep complete control over the property. So if your state doesn’t count the value of your residence for purposes of Medicaid eligibility, your continuing ownership won’t make you ineligible for benefits.

The Drawbacks:

Complications may arise when there are multiple owners or multiple beneficiaries.

The deeded property remains in the owner's estate for estate tax purposes.

If the deed is recorded, it reveals publicly who will receive the property at death.

The life tenant could mortgage, encumber, or convey the property before the beneficiary receives it.

The beneficiary could predecease the life tenant and a title company could require probate of the beneficiary's estate by interpreting the remainder interest as being vested subject to divestment.

The life tenant could predecease the remainderman causing judgments against the remainderman to attach to the property.

In the absence of case law or statutes in certain jurisdictions, title companies may not answer specific issues, leaving unresolved questions

.

Jimbo,

Lots of good information here. Thanks. However, your first three paragraphs seem to contradict the remainder of your treatise. The remaining info looks good, except your mention of multiple beneficiaries possibly being a drawback. This would not be the case as the named beneficiaries on the deed are entitled to an equal share unless otherwise stipulated. Nothing unclear about that. When the deed is drafted you also can choose whether or not the heirs of any pre-deceased beneficiary would be included.

[ijusluvit]

OK, for those of you who have trusts, may I ask about what they cost?

[NECHFalcon68]

Originally Posted by NECHFalcon68

Not sure of this...we have a ladybird deed and our "beneficiary" has no rights to the property while we are both alive, nor can they inhibit any actions on the property such as refinance, sale, etc. Absolutely no restrictions on our power to own the property.

Jimbo
My apologies...fingers started typing before I thoroughly read your post...you were referring to standard life estate deeds, while I thought you were saying that enhanced deeds had limitations...

[784caroline]

From what I understand. setting up a trust for you and your spouse is not the major expense.

Where you can run into a major expense is if you have the attorney involved in "funding" the trust...ie transfering title to any property and accounts you want included in the trust. Depending upon your circumstances, this can take some time to complete.
But as you can imagine, having a trust, without it being properly funded is of no value to anyone.

[sandybill2]

Originally Posted by ijusluvit

OK, for those of you who have trusts, may I ask about what they cost?

We moved here in 2007----we went to local atty---had trust established--they also included the advance directive, medical power of atty, a "will" in case we opened an account or acquired something that we forgot to put into the trust name, etc. The cost was around $900.00.

[Bryant]

Trust which included Wills (2), POA's (2) and Living Wills (2) six years ago was around $650-$700. Cost to transfer property into name of trust around $25. Form letters are given to you to send to companies involved in your holdings along with a copy of the trust document (funding). Last year had to make 1 change in Trust doc and the cost was $150 (up from $100 when Trust was drawn up.)
Now, once you pass, if the lawyer gets involved, maybe that's where the cost comes into play???