Many people take great steps to avoid probate. The reasons for doing this are numerous. The biggest reasons are the time and expense of the probate process. One of the primary assets which typically go through probate is the person’s home. A “life estate” or “lady bird” deed is a way to avoid having a home or piece of real property have to go through the probate process.
If a person lists a beneficiary on their bank accounts or retirement accounts, then the funds go directly to the beneficiary without having to go through the probate court process. The lady bird or life estate deed works very similarly.
A person who owns their home outright will execute a deed which reserves to themselves a life estate with a remainder interest going to their beneficiaries. Reserving a life estate means that the person who owns the home retains the right to live in their home for as long as they live. The person can feel assured that no one can take their home from them while they are alive. The beneficiaries who are listed as the remaindermen take title to the property automatically when the person passes away. No probate is needed and all the beneficiaries have to do is file a death certificate in the real property recording office where the property is located.
Typically, life estates are done when persons are older in age. The reason being that once the life estate deed is signed, you can’t change the beneficiaries later on. It is important to have an attorney prepare the life estate deed so that it is done correctly. Depending on the value of the home, there can be certain gift and estate tax implications with such a transaction, which means that consulting with an attorney first is a very good idea.