Ladybird Deeds and Unintended Consequences: D.I.Y or DON’T

By: Mark W. Nelson

If you’re talking to a friend and they tell you they have a way you can transfer your house to your kids when you die and avoid probate, that sounds pretty good, right? They’ll tell you it’s simple, all you need to do is go online and search for Ladybird Deed. 

Is your friend right? Will this deed transfer your property to your children and avoid probate? The short answer is yes, a Ladybird Deed will do those things. It seems simple; you’ve found a form online to copy. Why not just do that? 

Unintended consequences.

Unintended consequences are the reason you shouldn’t DIY a Ladybird Deed. What sounds like a very reasonable proposition can lead to very expensive litigation later. As with any other estate planning tool, you’re best served to discuss the pros and cons of a Ladybird Deed with a qualified estate planning attorney.

If, like most Americans, you have more than one child and you utilized a Ladybird Deed to transfer that property to your children, you have made those children co-owners of the property upon your death. None of the children would have a superior legal position to the others regarding ownership of the property. All of them would be equally responsible for the costs of maintaining the property. All of them would have to agree if the property were to be sold. All of them would have to agree if one or more of them were going to live in the home. None of them could exclude another of their siblings from entering or living in the home. Each of their creditors could file a lien against the home. 

This is ownership by committee. Any action by this committee requires unanimous agreement. Do you think all of your children agree on everything all of the time? Once they all own the property, the only way to resolve a disagreement is through litigation; litigation that will put your children on the opposite sides of a costly lawsuit. Your decision now to save a little money could cost your children a lot of money later on.

Contact an Estate Planning Attorney in Ann Arbor to Help You!

There are many ways to transfer your property to the next generation, but they’re not all created equal. Before making a decision that could create more discord than harmony contact an estate planning attorney in Ann Arbor at Pear Sperling Eggan & Daniels, P.C.