Ladybird Deeds
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Contents
Overview
Enhanced life estate deeds tend to use common law principals of life estate, remainders and the retained power to sell or mortgage rather than statutorily created situations. The deed takes the form of A conveys to B reserving a life estate unto A together with the power to sell or mortgage the entire fee. Most states will view this as vesting a remainder in B subject to A’s life estate and subject to defeasance, fully or partially, by A’s affirmative act(s).
As an aside, the IRS will view enhanced life estate deeds as vesting a “power of appointment” in A. That makes A potentially liable for gift taxes as they are either making a gift to themselves of the remainder by selling/mortgaging or a gift to B by dying.
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