San Antonio Express-News MySA.com Copyright 2011, Paul Premack
September 30, 2011
Does a Lady
Bird Deed trump instructions in the Will?
Dear Mr. Premack: My mom and dad had a Will that left their assets
to me, my brother and my sister. Years later, they signed a Lady Bird Deed
leaving their home to me and my sister only. It is filed with the
courthouse. My brother has gotten his inheritance money and lived for free
in their garage apartment for over 6 years. They paid his bills giving up
their supplement insurance and nearly their medications to care for him.
He did not want his name on the Lady Bird deed because of his felonies and
the fact he has never paid taxes so the IRS would come after his part. He
has no part as far as I'm concerned. His part was given to him while they
were living. Does the Lady Bird Deed disqualify the Will?- ST
phrase “Lady Bird deed” is an informal designation that is starting to be
thrown around rather loosely. To be specific, it is a legal transfer of
title in which the property owners transfer title to the house while
retaining two rights: 1) the right to occupy the house via life estate,
and 2) the right to unilaterally change their minds and reclaim or sell
full ownership of the house.
Lady Bird deeds are also referred to
as “enhanced life estate deeds” because an ordinary life estate deed does
not include the right to reclaim ownership. Lady Bird deeds are most often
used, under current Texas legal rules, to help avoid a claim from the
Medicaid Estate Recovery Program.
In addition to being different
from ordinary life estate deeds, Lady Bird deeds are different from
regular warranty deeds. A warranty deed is a full conveyance of ownership
that does not include either of the reserved rights (no right to reclaim
title, and no right to occupy the house via life estate). Since you said
your mother signed a Lady Bird deed, I’ll assume you are correct – but you
should re-read the deed to be sure that you are calling it by the right
name, and that it is not an ordinary life estate or a full warranty deed.
You also said your parents had “a Will that left their assets to me,
my brother and my sister.” Are you forgetting to mention that they first
left their assets to each other? When you father died, the Will probably
left his share of the house to your mother. The children have no rights
until both parents die. That would be consistent with the Lady Bird deed,
in which they retained life estate until both of them die.
Lady Bird deed, they named only you and your sister as owners of the
house, and left out your brother. You are concerned because the deed is
not consistent with the Will. You wonder which dominates: the Will or the
deed. The answer is: the deed dominates over the Will on condition that
your mother does not exercise her retained right to reclaim ownership.
If she leaves the situation as-is, then when she dies you and your
sister become full owners of the house by virtue of the Lady Bird deed.
Title passes to you without probate and without reference to the Will.
Your brother gets no part of the house.
However, if she exercises
her retained right to reclaim ownership of the house (or your brother
convinces her to exercise it) then the Lady Bird deed is canceled. Once
canceled, the Will is restored to its role as the primary legal tool for
determining ownership of the house. If the deed is cancelled before your
mother dies, then your brother does inherit a 1/3 share of the house under
the terms of the Will.
Disclaimer: This column answers a specific
legal question asked by an individual in Texas. The answer may or may
not match your individual situation. Be careful not to treat this
column as specific legal advice, as it may not meet your individual
needs. It may give you a solid basis for discussion with your own
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attorney before you take any action on this or any legal issue.
Also, please be aware that laws change, so this column is valid only
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Paul Premack is Certified as an Elder Law
Attorney ( CELA ) by the National Elder Law Foundation as accredited by
the Texas Board of Legal Specialization and tthe ABA. He is licensed to pracice law in Texas.
Benjamin Premack holds a JD and a Masters Degree in International
Affairs, and is licensed to practice law in Washington State and in