Enhanced Life Estate Deeds, commonly known as "Lady Bird Deeds," are a specific form of property deed used in some states, including Vermont. They offer a unique way to manage real estate property during and after the owner's lifetime. Here's an overview of what they are and their purpose:

What is an Enhanced Life Estate Deed?

An Enhanced Life Estate Deed is a legal document that changes how property is owned and transferred. It divides property ownership into two distinct interests:

1. Life Estate Interest: The original owner (grantor) retains a life estate interest. This means they have the right to use, profit from, and live on the property for the duration of their life.
2. Remainder Interest: The deed also names one or more remainder beneficiaries who will receive the property upon the death of the life tenant (original owner).

Key Features of Enhanced Life Estate Deeds

• Control During Lifetime: The grantor retains significant control over the property during their lifetime. They can use it, rent it out, or even sell it without needing permission from the remainder beneficiaries.
• Avoidance of Probate: Upon the death of the life tenant, the property automatically transfers to the named remainder beneficiaries without going through the probate process. This is a key advantage, as it simplifies and speeds up the transfer of property ownership.
• Flexibility: Unlike a traditional life estate, the grantor in an Enhanced Life Estate Deed can change their mind and revoke or modify the deed without the consent of the remainder beneficiaries.

Purpose of Enhanced Life Estate Deeds in Vermont

1. Estate Planning: They are primarily used for estate planning purposes, allowing individuals to pass on property to heirs smoothly and quickly.
2. Probate Avoidance: By bypassing probate, it saves time and money, reducing the legal complexities for the beneficiaries.
3. Medicaid Planning: These deeds can sometimes be used in Medicaid planning. Since the property may not be counted as an asset for Medicaid eligibility purposes, it can be a way to preserve family property. However, this should be approached with caution and professional advice, as Medicaid rules are complex and vary.
4. Flexibility and Control: They provide the original owner with flexibility and control over the property during their lifetime, a significant advantage over other estate planning tools.

New Vermont Statute allowing Enhanced Life Estate Deeds

Vermont's recent statute regarding Enhanced Life Estate Deeds marks a significant advancement in estate planning and property law. This new legislation provides a clear and more certain legal framework for the continued use of Enhanced Life Estate Deeds. The statute reflects Vermont's commitment to offering flexible and forward-thinking solutions in estate planning, catering to the unique needs of its residents.

Conclusion

Enhanced Life Estate Deeds can be a valuable tool in estate planning in Vermont, offering a blend of control, flexibility, and ease of transfer. However, they are not suitable for every situation, and their implications, especially concerning taxes and Medicaid, should be carefully considered. Consulting with a Vermont real estate attorney is crucial to understand if this tool is right for your estate planning needs.