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Deeds
Quitclaim Deeds
A Quitclaim Deed only conveys to the Grantee (person getting the land) whatever rights the grantor has in the property. In other words, they may be telling you that they’re not sure exactly what rights they have in the land or whether they have good title, but whatever ownership rights they have in the property, they are giving/selling to you. However, they are making no guarantees. Unless you know that the grantor has good title to the property, I would avoid these types of deeds because you could be purchasing or relying on receiving full and complete ownership rights to the property when in reality you might not. These types of deeds cost the same as a Warranty Deed, but you are getting no guarantee of anything.
Warranty Deeds
A Warranty Deed is a deed transferring property, and the seller or grantor is guaranteeing you they own full rights to the property that they are giving you (keep in mind they might be reserving the oil, gas, and mineral rights to the property or an easement, but that will be spelled out in the deed if that is the case). So if you acquire the property via a warranty deed and later find out that the seller/grantor did not own the property, you can look to them to make it right, or you will have legal remedies. This is by far the most common type of deed that I draft, and I usually prepare deeds like this for people giving deeds to loved ones or selling real property to someone that is paying cash for the transaction. Also, in certain circumstances, spouses will sign over their interests in property to each other.
Ladybird Deeds
A Ladybird Deed is a deed that conveys property to another, but not until after their death. Until their death, the property remains their property, and they can change their mind and revoke the transfer. These types of deeds are used often for people that want to avoid probate after their life. A Ladybird Deed is different from other deeds in at least two specific instances. First, it establishes a life estate, which means they will continue to have the full use and enjoyment of the property for the balance of their life. Secondly, this deed allows them the right of revocation, meaning they have the right to change their minds and keep the property or to give the property to someone else or to sell the property and keep all the proceeds themselves. The grantee has no rights in the property until the grantor dies. However, if the grantor signs this deed and does not change their mind, then the real estate becomes the property of the grantee(s) immediately upon the death of the grantor. One final action needs to be taken following the grantor's death, and that is an Affidavit of Death needs to be filed with the county clerk in the county where the property is located to put the world on notice that the life estate associated with the property no longer exists. At that time, the grantee(s) may do with the property as they wish.
A Ladybird Deed is an excellent way to avoid probate. Additionally, we use Ladybird Deeds for people that are applying for Medicaid or who think Medicaid may be on the horizon. Medicaid helps with the costs associated with people needing nursing home help or in-home care. However, Medicaid is not free money; it’s a loan, and they keep track of how much they pay on the patient’s behalf over their illness. After they die, Medicaid turns their file over to the Medicaid Estate Recovery Program (MERP) to attempt to collect from the deceased patient’s estate. A Ladybird Deed is an exceptional instrument to use to protect your property. Medicaid does not see the Ladybird Deed as a transfer of assets because the property is not transferred during their life. It remains their property until they die, and because the property transfers immediately upon death, it does not become part of their estate and is not subject to probate, thus leaving Medicaid without a way to file their claim.
These questions are answered in general terms and are to be used for informational purposes only. They are not to be considered as legal advice, and they are not intended to take the place of a conversation with an attorney. Please contact our office for a more detailed explanation of these or other matters if you have questions.