The term “Life Estate” refers to a type of real property conveyance in which a person is granted the use and ownership of a piece of real property for their lifetime. The person who is granted these rights is referred to as the life tenant. As a legal term, life estate describes a type of joint ownership involving real estate.
Life estate arrangements are commonly used to convey property between relatives or close friends. They are useful for situations in which the property may be used by another person for an extended period of time, but the owner wants the property to revert to their own possession for legal purposes. The fact that the property will return to the original grantor is the defining aspect of a life estate, and is referred to as reversion.
As such, the holder of a life estate is generally entitled to use the property during their lifetime; however, they will not be able to transfer it to their own heirs upon their death. This is due to the fact that the holder’s interest in the land does not survive after the person dies. A life estate can be created by will, trust, or deed.
An enhanced life estate deed is also known as a “lady bird deed,” or simply an “enhanced deed.” It is a specific type of legal document which enables a property owner to transfer their property to a named beneficiary upon their death. In most estate-related matters, the property must be transferred to the beneficiaries by using the procedures of the probate court. This process can be costly and is often time-consuming. Alternatively, an enhanced life estate deed allows for the transfer of property to occur without ever having to go through the probate process.
Similar to a standard life estate deed, an enhanced life estate deed allows the property owner to retain ownership. This gives them continuous control over that property until they are deceased. However, enhanced life estate deeds impose fewer restrictions than standard life estate deeds. Additionally, enhanced life estate deeds provide greater benefits to its creator.
An example of this would be how the property owner will be able to sell or make a profit off of their property throughout their lifetime. Another example would be how they will also still be eligible to receive specific benefits that may be connected to that property, such as Medicaid.
It is important to note that enhanced life estate deeds are not recognized by the law in every state. The only states that currently offer enhanced life estate deeds as an estate planning option include: Florida, Texas, Michigan, Vermont, and West Virginia. This is one of the most considerable disadvantages of lady bird deeds.
What Are Some Typical Disputes Over Enhanced Life Estate Deeds?
One of the biggest advantages of enhanced life estate deeds is that they actively work to avoid disputes. However, as with any type of life estate deed, there are various legal issues that can arise when an enhanced life estate deed is involved. Some examples of the most common causes of lady bird deed disputes include:
- Claims concerning who the proper beneficiaries are and whether they have been accurately identified;
- Disputes regarding the rights of the property owner, such as whether or not they may sell the property contained in the deed prior to their death;
- Disputes regarding the actual value of the property, in which case a property appraisal may be necessary;
- Issues related to specific state laws, due to the fact that enhanced life estate deeds are not available in every state; and
- Other legal problems that could involve property taxes or property insurance, due to the fact that some insurers may be reluctant to insure a property that has been transferred through an enhanced life estate deed.
As with any lawsuit, the reasons for the claim may vary according to the laws of a particular state as well as the individual facts surrounding a specific case.
An enhanced life estate deed is generally created by agreement between the property owner and the life tenant, and accomplished through a written document. This is much like the way a contract is used for other types of contracts. An enhanced life estate deed form may be required, depending on state laws regarding the matter.
How Are Estate Dispute Matters Resolved?
Generally speaking, life estate deed disputes are resolved through a civil lawsuit. This could result in a damages award issued to the life tenant, depending on the losses experienced by that party. An example of this would be how a fraudulent transfer of a life estate interest can affect the life tenant, as well as the party whom the life estate is supposed to revert to.
Such a process will usually require a detailed analysis of the deed documents. Because of this, it is always best for the deed document to be preserved in writing and recorded with the county office.
Disputes regarding enhanced life estate deeds can be considerably difficult to resolve, especially in cases involving a property owner that has already passed away. In cases such as these, because the parties can no longer ask the property owner specific questions about the issue, the remedies for the dispute may require a re-examination of the various estate documents that the property owner left behind.
Because of this, some of the ways in which an estate dispute can sometimes be resolved include the following remedies:
- Making adjustments to the administration of the estate, such as by choosing a different estate executor;
- Redrafting or rewording the overall estate plan according to the property owner’s original intentions, which can be done by reviewing related documents and instructions;
- Reviewing the relevant document in order to determine who the actual beneficiaries are;
- Redistributing property to the proper recipient; and
- Petitioning the court to issue a damages award in order to recoup any financial losses caused by an act of breach, violation, improper distribution, and so forth.
It is common for a monetary damages award to be adequate enough to reimburse a party for losses related to an enhanced life estate deed. However, in other situations, the damaged party may need to seek a different remedy. An example of this would be requesting an injunction from the court that would require the deed to be transferred immediately to the rightful beneficiary.
Do I Need to Hire a Lawyer for Help With an Enhanced Life Estate Deed?
To reiterate, enhanced life estate deeds are currently only available in five states. Because of this and their complexity, they are governed by considerably specific state laws. If you have any questions about these deeds, or wish to create one, you should consult with a local estate lawyer for further advice. An experienced and local estate attorney will be best suited for ensuring you understand your state’s laws regarding enhanced life estate deeds.
A skilled and knowledgeable estate lawyer can determine whether an enhanced life estate deed is the right estate planning tool for you. They can also inform you of any other option if your state does not recognize this form of deed. They can assist in the drafting, editing, and review of your estate documents. An estate attorney will also represent you in court as needed, should any enhanced life estate deed disputes arise.