This column first appeared in the San Antonio Express News and other Hearst Newspapers on May 20, 2019.
Dear Mr. Premack: My wife and I are both living. Can we each sign a Lady Bird Deed leaving our home to which spouse survives the other. Thank You – DW
I’ve written about Lady Bird Deeds in past columns. As a definition recap, a Lady Bird Deed (sometimes called an Enhanced Life Estate Deed) allows the current property owners to retain use and homestead status in the property, and to pass the property to the remainder holder (like the adult children) upon death. The current property owners also reserve the right to cancel the deed unilaterally. Consequently, there is no value transferred to the remainder holder. There is no gift tax. There is no disqualification from receiving Medicaid.
Most often, Lady Bird Deeds are initiated after one of the spouses dies. This is because the Medicaid rules themselves protect title to the house while there is a surviving spouse (that is, MERP has no claim against the house when the Medicaid patient dies leaving a surviving spouse).
I sense that your biggest concern is not Medicaid, but is the avoidance of probate when the first of you dies. If that is the case, then the more acceptable approach is to use a Community Property Survivorship Agreement (CPSA) instead of a Lady Bird Deed. Chapter 112 of the Texas Estates Code expressly authorizes the avoidance of probate via the CPSA.
You will need an attorney to properly prepare your CPSA. It should list the legal description of your home, should address situations under which it may be revoked, and should contain legal provisions to ensure that your home is classified as community property under Texas law. It must then be signed by both spouses in front of a Notary, and must be recorded with the County Clerk in the county of your residence.
Dear Mr. Premack: My sister and I are the only siblings remaining in the family. I am in my 80s and she is in her 70s. Our older sister died without a husband or children, and she left no will. My understanding is we are heirs to her house. My question now is, how to we get our names on the deed? L.R.
Under Texas law, ownership of any asset – including a house – is considered to pass immediately upon the death of the owner. What is lacking is documentation and proof of the identity of the new owners. Consequently, Texas law provides legal tools for settling this issue.
One legal tool is Affidavit of Heirship, a statement of the decedent’s family structure to announce the heirs, in the opinion of the person signing the Affidavit. If the facts are incorrect, ownership can be challenged. It is not approved by a court, so the audience is usually a title company at the time the house is offered for sale. There is risk that the Affidavit will not be accepted by a title company.
A second legal tool, Small Estate Affidavit, is limited by Texas law. It can pass title to the decedent’s homestead – it does not work for rental property – and requires that the heirs be a surviving spouse or dependent children. You, as surviving siblings, would be rejected by the court and are blocked from using a Small Estate Affidavit.
The fail-safe legal tool is court probate of your deceased sister’s estate. Without a will, the procedure is called Administration and would include a legal process called Determination of Heirship. The court examines the family structure and applies the Texas intestacy law to decide who owns the house. This is highly reliable although complex, and you’ll need an experienced probate lawyer’s assistance.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.Premack.com.