We held an ICLE Community Zoom session on Lady Bird deeds on Wednesday, June 23. These Zoom sessions are an informal chance for ICLE Community members to discuss a particular topic or ask each other questions. We were joined by George Gregory, of Kemp Klein, and Rick Mills, of Marcoux Allen, and had 90 people signed in at one point, which set a record for participation. Here are some of the highlights:
- Validity. While some practitioners question the validity of Lady Bird deeds, they appear to be here to stay, as they are being widely used, especially in Medicaid planning.
- Excessive beneficiaries. Too many beneficiaries increases the chance of problems down the road, especially if the beneficiaries die before the grantor. Rick discussed this topic in the latest issue of Res Ipsa Loquitur.
- Rejection of Lady Bird deeds by banks. Many practitioners are being required by banks to remove the remainder interest from the Lady Bird deed on the refinancing of a client’s mortgage, perhaps because of the secondary market. A good practice suggestion is to educate the client of this possibility in advance of the refinance and to have the client sign a letter indicating they are aware of the removal of the remainder interest.
- Step-up in basis. There was agreement that there would be a step-up in basis at the death of the grantor and that this stepped-up basis survives if the remainder beneficiary is the grantor’s trust.
We did not get to everyone’s questions in the 45-minute session, but we will be recording a seminar with Harley Manela, of Mall Malisow & Cooney, on Lady Bird deeds. Some of you may remember Harley’s 2008 seminar on the same topic, which was quite popular. Look for that posting to our website in August.
Thank you to everyone who participated on Wednesday.