Many years ago a client of mine had a quitclaim deed drafted to put his son on the deed to his home. With a quitclaim deed, in the event of my client’s death the son would automatically become the owner without the property going through probate.
Recently, my client asked me to sell this home. Because of the quitclaim deed the son is on the title, is 50% owner, and is legally entitled to 50% of the proceeds.
Fortunately, the son does not want 50%. He only wants $30,000, which is what his father told him he could have 5 years ago when they both signed the quitclaim deed. So far, so good.
The home was listed and a buyer submitted a purchase agreement. Both father and son agreed to sell and both agreed to give the son the $30,000.
However, there was a catch. The father decided the son should use his proceed to buy a house, and said he will not sign the closing documents if the son does not agree. While the son is not opposed to buying a house, he feels he is not ready today. The father refused to close unless his son put in writing how he plans to spend the money.
Clearly, without any previous agreement the father has no legal right to dictate how the son spends his money. But older parents can be stubborn, and the property may never be sold.
What the father could have done to avoid this problem was to sign a lady bird deed. Also called an enhanced life estate deed, it gives the owner continued control over the property until his or her death. Once the owner dies, the property is transferred automatically to the new owner(s) without the need for probate.
A lady bird deed would allow the father to sell at any time and keep all the proceeds. With his proceeds he could create a trust that is released to the son upon a fully accepted purchase agreement on a house now or in the future.
A better solution than giving up 50% control.
I have only one son, and I have a lady bird deed in place. If anything happens to me, my home and property will automatically be transferred to him. However, if I decided to sell now, he would have no say in the matter.
I love my house and do not plan to move anytime soon. However, if I decided to sell, I feel safe knowing it would be my decision alone. While I can’t say a lady bird deed is right for everyone it was right for me. If you have a child you want to leave your real estate to, it might be the right decision for you too.
Photo by John Moeses Bauan on Unsplash