lady bird deed

Common Mistakes Women Make in Estate Planning!

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A large amount of women hold a substantial amount of wealth in this country, however, many do not take the correct steps to protect their assets.  It’s a simple fact that Women live longer than men!  By the time a woman is 85+ she will outnumber men by 25% and she is 9 times more likely to live past 100 than a man.  When the husband gets ill, becomes disabled or passes away, it is the WIFE who is left to deal with the couples finances.  Therefore, it is necessary for women to get more involved in the couple’s finances well before any of these life changing events occur.  What should a Woman avoid?

Putting off Estate Planning. Probating an estate without a will takes longer, cost more money, requires more court involvement and the state law determines who gets your possessions. But the biggest reasons you should have a will is to keep the family harmony! There’s no excuse for putting your family through the drama of trying to probate an estate without a will!

Trying to Do It Yourself! There are numerous ways to transfer assets upon death and a will is just one of them!  There are also numerous documents you may need depending upon your own circumstances.

  • Who gets your stuff once you pass?
  • Who gets the responsibility of being your executor and what does that mean?
  • Who makes decisions for you upon disability or incapacitation?
  • Who makes burial decisions once you pass?
  • Do you need a Special Needs Trust now or upon your death so your spouse or child doesn’t lose disability benefits?

These are all good questions to iron out with a professional!  The cost of preparing a will by using a professional should not prevent you from being prepared.  You can spend a little now or a lot later!  However, the main reason you should leave it to the professionals is because doing it your self means there is good chance that you will make a mistake!  I have had small and large estates where the person used a computer form incorrectly and it left us trying to figure out what they wanted to accomplish and cost the beneficiaries additional unnecessary expenses. I have also had clients write their own will giving away each of their assets to a specific person, but they forgot about after acquired items or potential future litigation.

Failing to Understand your financial situation. Many women find themselves lost when their husband passes away or becomes incapacitated because he was the one that handled the finances. While you may not want to be the one to deal with the bills on a daily basis you should always know what assets you have as a couple, how those assets are disposed of upon death, and what your estate plan is as a couple.

Failing to Probating Husband’s Estate.  Women are more likely than men to put off probating their spouses estate.   Many women think that they get it all so there is no need to probate, but this always causes problems down the road.  It is necessary to probate the will to transfer assets such as, bank accounts, investment accounts and real estate.  What happens when you want to sell or refinance your house and it is still in both names?  What happens when you pass away and your children try to probate your estate and there are joint accounts or property?

In Texas, a Will can only be probated within 4 years of death unless there are extenuating circumstances and then it can only be probated as a Muniment of Title.  So waiting to probate a Will seriously limits your options!   Do you really want your children to have to deal with your husband’s estate years down the road?  Do you really want the Court to tell you that you now only own one-half of your house because you failed to probate?

If your husband doesn’t have a Will, then it is important to probate now rather than later!  The main reason is because you or your children may not be able to find witnesses in 10 or 20 years.  So as you can see it is very important to consult an attorney after your spouse dies to discuss the ways you can go about making sure you preserve your rights.

Failing to Consider the Possibility of Incapacity.  Women live longer and are more likely to be the caregiver of their husbands or parents, so it is likely that a woman is going to have to deal with long-term care during her lifetime. For this reason, it is important for women to be informed, involved and understands her financial affairs.  Here are a few questions you need to discuss with your estate planning attorney are:

  • Do I need a Guardianship Designation? It lets you chose now rather than allowing a Court to decide who will have control over your person and finances if you become incapacitated or the POA’s are not enough.
  • Do I need to provide for a Special Needs Trust for disabled or incapacitated spouses or children? If your spouse or child receives financial assistance, you would not want to leave them assets that would affect this assistance.
  • Do you need a Lady Bird Deed? This tool could help preserve your home to be left to your children at your passing being used to pay your creditors.

Failing to Consider Burial Plans.  Since you will likely outlive your husband, have you considered that it will be up to you to make the funeral plans after his passing.  Many women are too upset about their loss to handle these arrangements so it is left up to the children or funeral home.  But what if you and your husband could make these plans in advance of either’s passing?  This doesn’t mean you have to purchase burial plots and pay for burial plans!  This just means you have a written plan in place and designate an agent to carry out this plan after you are gone.  It makes sense to have such a plan because it is easier on the remaining spouse who has to deal with the loss or with the spouse’s other family members.

Does a lady bird deed interfere with spouse’s homestead right?

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Previously I wrote about the use of a lady bird deed, however, recently I was asked a specific question as to how the lady bird deed affects the spouses homestead rights.

Example: A party is married and they execute a lady bird deed to their children on their separate property which is their homestead.

The deed would not displace the spouse at death because the homestead right is attached to the separate property and community property. Therefore, while the children might now own the property, the spouse has the right to live in the house.

I found a very good article by Paul Premack that discusses this issue in detail. To check out this discussion, click on the box below.

The content of this article is provided for informational purposes only and does not constitute legal advice.

What is a Lady Bird Deed?

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A “Lady Bird Deed” is a nickname given to an Enhanced Life Estate Deed, which is used to convey property to your heirs outside of probate. This deed is commonly used in Texas because it allows the grantor to transfer property to beneficiaries while retaining a life estate in the property coupled with the power to sell, convey, or mortgage the property without the beneficiaries’ consent. The beneficiary of the deed does not get any rights to the property while the current owner is alive.

The Lady Bird Deed’s features include:

  • allowing the property owner to retain his homestead creditor and tax exemptions;
  • keeping the property owner’s home exempt from Medicaid claims during his lifetime;
  • allowing the property owner to pass the property to his heirs outside of probate upon death free of Medicaid claims and liens; and
  • allowing the property owner to live in the property, rent the property, or sell the property without the consent of the beneficiaries.

This deed is most helpful because a life estate is created and no trust is necessary. Instead of probating the owner’s estate, the beneficiary only has to file the death certificate in the local county records for the property to be transferred.

The main purposes of using a Lady Bird Deed is:

•avoid probate of the property
•keep the right to use and profit from the property for your lifetime
•keep the right to sell the property at any time
•avoid making a gift that might be subject to federal gift tax
•avoid jeopardizing your eligibility for Medicaid
•avoid the application of MERP

For a look at how this deed affects your living spouses homestead right, click HERE!