Share

The Dean Law Firm Blog

Friday, May 20, 2016

Enhanced Life Estate Deeds – What are they?

Have you ever heard the term “Enhanced Life Estate Deed” or “Lady Bird Deed”?  Many have heard these terms, but may not understand what this document is or what the purpose of having such a deed would be.

Establishing a life estate is a relatively simple process in which you transfer your property to your children or another beneficiary, while retaining your right to use and live in the property. Utilizing an enhanced life estate is different from a traditional life estate. Life estates avoid having to probate the property while maximizing tax benefits.  An enhanced life estate also provides these benefits, but further protects the real property from potential long-term care expenses you may incur in your later years. Should you need Medicaid or other governmental benefits to pay for long-term care, your home remains an exempt asset that cannot be sold to repay the State of Texas upon your death. Transferring property into an Enhanced Life Estate avoids some of the disadvantages of making an outright gift of property to your heirs. However, it is not right for everyone and comes with its own set of advantages and disadvantages.

Life Estates establish two different categories of property owners: the Life Tenant Owner and the Remainder Owner. The Life Tenant Owner maintains the absolute and exclusive right to use the property during his or her lifetime. This can be a sole owner or joint Life Tenants. Life Tenants maintain responsibility for property taxes, insurance and maintenance. Life Tenants are also entitled to rent out the property and to receive all income generated by the property.  With Enhanced Life Estates, the Life Tenant also may sell the property and retain all the sales proceeds, but doing so loses the advantage of protecting the home from Medicaid and Medicaid Estate Recovery.

Remainder Owners automatically take legal ownership of the property immediately upon the death of the last Life Tenant. Remainder Owners have no right to use the property or collect income generated by the property, and are not responsible for taxes, insurance or maintenance, as long as the Life Tenant is still alive.

Life Estates are simple and inexpensive to establish, and can protect the home of someone needing long-term care. 




The Dean Law Firm, PLLC assists clients with Estate Planning, Advanced Estate Planning, Planning for Children, Probate/Estate Administration, Elder Law and Civil Appeals in Sugar Land, TX and throughout Houston in Fort Bend County and Harris County.



© 2017 The Dean Law Firm, PLLC | Disclaimer
1650 Hwy 6 South, Suite 100, Sugar Land, TX 77478
| Phone: 281-277-3326

Estate Planning | Advanced Estate Planning | Business Succession Planning | Civil Appeals | Probate / Estate Administration | Elder Law | Guardianships | Asset Protection | Special Needs Planning | Planning for Children | About Us

Amicus Creative