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Life Estate Deed

Jeramie Fortenberry

Attorney (J.D., LL.M.)

Last updated Jul 17, 2023

Table of Contents

What is a Life Estate Deed?

A life estate deed is a special deed form that allows a property owner to use the property during life and transfer the property automatically at death. Life estate deeds are designed to transfer the property at death without losing the ability to use the property during life.

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As discussed in How to Avoid Probate of Real Estate , a life estate deed is a popular estate planning tool. Life estate deeds are the oldest form of deed for avoiding probate at death and are well-established in most states. But, as discussed below, life estate deeds forfeit control. In states that recognize lady bird deeds or TOD deeds, the probate avoidance benefit of a life estate deed can be achieved without the loss of control. Life estate deeds are most often used in states that do not offer lady bird deeds or TOD deeds.

How Life Estate Deeds Work

Life estate deeds work by dividing the property into two types of interests. One interest is measured based on the owner’s lifetime and is called a life estate . The interest that passes at the owner’s death is called a remainder or remainder interest . The life estate and remainder interest are then transferred to different owners. There are three categories of owners:

• Current Owner (Grantor) – The person creating the deed is called the grantor .
• New Owner (Life Tenant) – The person who owns the life estate is called the life tenant .
• Future Owner (Remainder Beneficiary) – The person who will acquire the property when the life tenant dies is called the remainder beneficiary or remainderman .

As with other deeds, these terms refer to different types of owners, not to specific individuals. The same party may serve in multiple roles. The current owner ( grantor ) is usually also the life tenant. Similarly, multiple individuals may serve in the same role. For example, there may be two grantors, three joint life tenants, and one remainder beneficiary.

Example: Peter creates a life estate deed transferring his property to himself, as life tenant, with the remainder to Paul and Mary. The effect of this deed is to retain a life estate for Peter as life tenant. At Peter’s death, the remainder interest will automatically transfer to Paul and Mary.

Attorney Practice Note: As discussed below, there are two types of life estate deeds: Traditional life estate deeds and lady bird deeds, also called enhanced life estate deeds . This article focuses primarily on traditional life estate deeds. See our discussion of lady bird deeds for more information about enhanced life estate (lady bird) deeds.

How to Create a Life Estate Deed

The creation of a life estate deed can be tricky. It is important to include the right language to create the life tenant relationship. If multiple parties will serve in the same role—for example, if there are multiple life tenants or multiple remainder beneficiaries—it is important to also include language that defines the relationships within that role, including the form of co-ownership for multiple remainder beneficiaries.

Need to create your own life estate deed?

The deed forms prepared by ouronline deed preparation service were designed by licensed attorneys to include the language needed to create a valid life estate deed. It uses a simple interview to collect the information needed, then creates a customized deed that matches the choices you made in the interview. Each deed is designed to satisfy state-specific requirements, including recording requirements.

Comparison to Other Deed Forms

A life estate deed is not the only way to transfer property at death. Property will automatically transfer to the surviving owner at death if it is titled with right of survivorship (as tenancy by the entirety, joint tenants with rights of survivorship, or community property with rights of survivorship). With these forms of co-ownership, the owners have simultaneous possessory rights. Each owner can occupy or use the property at the same time.

A life estate deed is also a form of co-ownership. Both the life tenant and the remainder beneficiary have real interests in the property. But unlike other forms of co-ownership, they do not have property rights at the same time as each other. Instead, their interests are stacked in time. Only the life tenant has a right to current possession of the property. The remainder beneficiary’s interest does not begin until the life tenant’s death.

Comparison of Life Estate Deeds to Lady Bird Deeds and TOD Deeds

Life estate deeds avoid probate at death, but at the cost of sacrificing control during life. The transfer of an interest to the remainder beneficiaries gives the remainder beneficiaries present rights to the property. Even though the remainder beneficiaries do not have possessory rights to use the property while the life tenant is still alive, the life tenant cannot convey or mortgage the property without the consent of the remainder beneficiaries. This has been known to cause issues with loans. The life tenant also owes duties to preserve the property for the benefit of the remainder beneficiaries and must take their interests into account in making decisions.

Many people would prefer to avoid probate at death without sacrificing control during life. In the past few decades, an increasing number of states permit the use of other deed forms that avoid probate without loss of control. The two predominate deed forms are:

• TOD Deed – A TOD deed (also called a beneficiary deed or transfer-on-death deed) allows the owner to name a beneficiary on the deed, similar to naming a beneficiary on a life insurance policy or bank account. During the owner’s life, the owner can freely revoke or change the beneficiary designation without involving or even notifying the beneficiary. Unless the designation is revoked, the property passes to the surviving beneficiary at the owner’s death.
• Enhanced Life Estate (Lady Bird) Deed – Recognized in only a handful of states, the lady bird deed “enhances” the traditional life estate deed by giving the life tenant the power to revoke the deed or transfer the property to other owners without involving the remainder beneficiaries.

Like a traditional life estate deed, both lady bird deeds and TOD deeds avoid probate on the death of the life tenant. But unlike a traditional life estate deed, the original owner reserves the right to freely deal with the property without involving the beneficiary. The owner may change the beneficiary or undo the deed, all without the beneficiary’s consent or involvement. This flexibility often makes lady bird deeds and TOD deeds popular alternatives to life estate deeds for avoiding probate.

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• Estate Planning

What is a Life Estate Deed? And How Does it Impact Your Property Planning?

• Brandon Haubert

Wondering what is a life estate deed? This estate planning document grants one person, known as the life tenant, the right to occupy a property until death, while designating another individual to inherit the property after the life tenant passes, bypassing the often lengthy and costly probate process. In this article, we break down everything you need to know about life estate deeds; from their establishment to the rights and obligations they have and their role in an  estate planning strategy.

Key Takeaways

• A life estate deed is a legal document that establishes a life tenant’s right to occupy and use property until death and designates a beneficiary (remainderman) to get ownership after, bypassing the probate process.
• Life estate deeds offer benefits such as avoiding probate, securing the right of the life tenant to occupy the property for life, and providing a structured ownership transfer, but they can also limit flexibility, decision-making, and expose the property to creditor issues.
• There are different types of life estate deeds, like the enhanced ‘Lady Bird’ deed, which provides additional control to the grantor, and these deeds need careful consideration of tax implications, Medicaid eligibility, and potential legal challenges.

Understanding Life Estate Deeds

A life estate deed is a legal document that alters property ownership, allowing the life tenant to occupy and use the property until death. This arrangement, a key component of the estate planning process, designates a beneficiary to get ownership after. The life estate deed  splits the property into two interests: a life estate for the grantor and a remainder interest for the beneficiary, who becomes the full owner upon the grantor’s death.

Unlike other forms of property ownership such as joint tenancy with right of survivorship, which follow different life estate rules, a life estate deed provides the life tenant with a secured right to possession until death. The beneficiary’s ownership interest in the life estate property is postponed until that time, without requiring probate. Life estate planning can help ensure a smooth transition of property ownership.

Upon the death of the grantor, the life estate automatically ceases, and the beneficiary’s vested interest in the property turns into full ownership rights, free from the probate process.

What is a Joint Tenancy Deed?

Key Components of a Life Estate Deed

Understanding life estate rules is crucial when dealing with a life estate deed, as it  defines the roles of the life tenant and remainderman. This is done using language such as ‘to [Life Tenant] for life, to [Remainderman] as the remainder,’ which establishes their respective interests in the property. The life tenant, while retaining the right to use the property for their lifetime, must maintain the property and is responsible for expenses such as property taxes, insurance, and mortgage payments. Furthermore, they need approval from the remainderman for major property decisions.

When a life estate deed is signed and recorded, the ownership interest of the remainderman ‘vests’ immediately. However, they do not gain control over the property until the life tenant’s death. At this point, the property is transferred without the need for probate. Variations of life estate deeds exist, such as ‘life estates pur autre vie,’ where the duration of the life estate is based on the life of a third person rather than the life tenant.

Life Estate Deed Creation Process

To establish the life tenant relationship, a life estate deed must incorporate specific legal language like “I, [Grantor], convey my real property to [Grantee], in fee simple reserving an irrevocable life estate a.” This written document must be prepared, indicating the grantor’s intention to convey the property for the duration of someone’s life. Keep in mind that accurate drafting is critical as the precise language and clauses for creating a life estate deed may differ from one state to another, requiring adherence to state-specific legal requirements.

Considering the intricate laws around life estate deeds and the potential for disputes, consultation with an estate planning attorney is recommended. They can guide you through the process, ensuring accurate documentation and that the deed aligns with your long-term goals.

Benefits of Life Estate Deeds

Life estate deeds come with many  benefits. The main advantage is the ability to bypass the probate process, allowing for immediate transfer of the property to the remainderman following the life tenant’s death. Through a life estate deed, the life tenant secures the right to live on the property for their lifetime, with the future transfer of ownership structured in advance. This provides stability and clarity for all parties involved. Some of the benefits of life estate deeds include:

• Bypassing probate
• Immediate transfer of property
• Lifetime right to live on the property
• Structured transfer of ownership
• Stability and clarity for all parties involved

Transferring property via a life estate deed has financial benefits too. It doesn’t incur gift taxes, making it a financially advantageous mechanism compared to gifts or other transfer methods. Lastly, life estate deeds can be part of a strategy to protect assets from Medicaid Estate Recovery, thus preserving the value for the remainder beneficiary.

Potential Drawbacks of Life Estate Deeds

Although life estate deeds have their benefits, they do come with certain potential drawbacks. Some of the main challenges include:

• Lack of flexibility: Changing a traditional life estate deed requires the agreement of all parties involved and once established, it cannot be easily revoked.
• Loss of decision-making power: The life tenant cannot make major decisions related to the property without input, losing their independence in managing the property.
• Permission required for alterations or sale: The life tenant needs the remainderman’s permission to alter or sell the property, which may result in entitlement to a portion of the proceeds.

These factors should be considered before entering into a life estate deed.

Financial responsibilities can also pose difficulties for the life tenant, who is responsible for paying property taxes and maintaining insurance on the property as if they were the full owner. If a remainderman faces legal issues, like owing taxes or being sued, this could lead to liens against the property. In such cases, the life tenant loses control over the property. Their interest is also vulnerable in cases of bankruptcy and divorce. Life estate deeds also complicate the process of selling or mortgaging the property, as they require cooperation among all beneficiaries, especially in the event of the life tenant’s death.

Addressing Common Concerns

There are, however, strategies to address prevalent concerns related to life estate deeds despite these challenges. Professional legal counsel is crucial when creating or terminating a life estate deed to ensure that it aligns with the grantor’s long-term goals and adheres to state laws. Effective and clear communication among all parties involved in a life estate is key to preventing misunderstandings and disputes regarding property rights and responsibilities.

The remainderman is entitled to defend their interest in the property, ensuring that the life tenant’s actions do not decrease the property’s value. If issues arise with an existing life estate deed, it may be possible to amend or revoke the deed with the agreement of all parties involved and through appropriate legal channels.

Comparing Life Estate Deeds to Other Estate Planning Options

Each estate planning option, including life estate deeds, offers varying degrees of control, flexibility, and protection. Here are some key differences between life estate deeds and trusts:

• Life estate deeds provide a straightforward transfer of property.
• Trusts, especially living trusts, offer more flexibility and control.
• An irrevocable trust offers more flexibility and protection from the costs of long-term care without restarting the five-year Medicaid look-back period upon the sale of a home compared to a life estate deed.

Transfer on Death (TOD) deeds allow property owners to:

• Retain full ownership and control with the property
• Automatically transfer the property to a designated beneficiary upon their death without going through probate
• Revoke the deed at any point, providing greater flexibility and control for the property owner during their lifetime as compared to life estate deeds.

Lady Bird Deeds, also known as enhanced life estate deeds, allow the grantor to retain control, including the right to sell or mortgage the property, unlike traditional life estate deeds. They offer tax advantages similar to the ‘step-up’ in basis, potentially saving significant capital gains tax for the beneficiary.

Medicaid Considerations and Life Estate Deeds

Medicaid eligibility and estate recovery can be greatly influenced by life estate deeds. Transferring property interest through a life estate deed may disqualify the life tenant from Medicaid assistance if they require long-term care within five years of the transfer. However, the ownership interest in property transferred via a life estate deed generally does not disqualify the applicant for Medicaid if the transfer was made outside the look-back period, which is typically 60 months.

Life estate deeds can initiate the five-year look-back period for Medicaid eligibility. In contrast, TOD deeds do not start this period, as they leave property ownership intact for Medicaid asset consideration. Moreover, life estate deeds can prevent the property from being subject to Medicaid estate recovery or other estate recovery processes. If set up sufficiently ahead of time, typically at least five years prior to applying for Medicaid, life estate deeds can form a strategic element in protecting the property from Medicaid estate recovery.

That being said, life estate deeds are a vested interest and cannot be undone by the State. The same is not true for TOD or Beneficiary Deeds. 

Navigating Taxes and Life Estate Deeds

Various tax implications are associated with life estate deeds. During the life tenant’s lifetime, only the life tenant can take advantage of the IRS exemption for personal residences, which can significantly reduce their burden of capital gains tax if they meet the criteria of residing in the property for at least 2 of the last 5 years. However, the remainderman may be liable for capital gains tax if the property is sold during the life tenant’s lifetime, as they are not eligible to claim the exemption for personal residences.

The life tenant may retain eligibility for property tax exemptions after transferring property through a life estate deed, including exemptions such as STAR, Senior Citizens, and Veterans exemptions. One of the benefits of this arrangement is that the life tenant remains responsible for property tax payments. Following the death of the life tenant, the remainderman receives a step-up in tax basis to the property’s fair market value as of the date of death, potentially decreasing the amount of capital gains tax due upon subsequent sale of the property.

If the property is sold while the life tenant is still alive, no step-up in basis occurs, resulting in capital gains taxes being calculated on the original purchase price and adjusted basis due to improvements.

Handling Property Sales and Mortgages with Life Estate Deeds

The process of selling or mortgaging property under a life estate deed can be intricate. Here are some key points to consider:

• The life tenant is prohibited from encumbering or attempting to sell the property without the express consent of the remainderman.
• This ensures that all parties’ interests are considered before altering the vested rights in the property.
• If a property is sold prior to the death of the life tenant, the proceeds from the sale are distributed between the life tenant and remainderman based on the life tenant’s current age and life expectancy.

Mortgage lenders may be reluctant or refuse to issue a mortgage on property under a life estate deed. This is because it requires consent from both the life tenant and remainderman, which adds complexity, especially when it comes to refinancing or taking out reverse mortgages. A remainderman’s ability to sell their interest in the property is tempered by the reality that any prospective buyer takes the property subject to the existing life tenant’s rights, potentially deterring interest and affecting the marketability of the property interest.

Resolving Disputes and Challenges to Life Estate Deeds

Legal challenges to life estate deeds can arise from dissatisfied family members, creditors, or other parties. These may involve claims about the proper beneficiaries, rights of the property owner, and problems with property taxes or insurance. Disputes may lead to the termination of a life estate if the life tenant commits impermissible acts that devalue the property or violate life estate conditions, with remedies including civil lawsuits and damages awards based on the tenant’s losses.

The involvement of a remainderman in legal issues can result in liens against the property and make the life tenant’s interests vulnerable, especially if the remainderman’s creditors attach their interest in the property. To navigate these issues, it’s advised to consult with a local estate lawyer for creating or resolving disputes with an enhanced life estate deed. A testamentary power of appointment can offer life tenants more leverage in negotiations to avoid disputes.

Real World Example

When Gwen’s husband Lonnie passed away, she was devastated yet committed to honoring his wish that their cherished Arkansas lakeside cabin stay in the family. Uncertainty set in on how to maintain lifetime rights herself while ensuring it passed to their children.

After getting a recommendation from a friend, Gwen consulted with WH Law’s  estate planning team. We advised that a life estate deed could grant her ongoing occupancy while designating their kids as joint remainder beneficiaries.

With our team’s guidance, Gwen executed a deed adhering to state specifications. It gave her continued responsibility for taxes and upkeep to prevent disputes. Most importantly, it vested their children with future ownership so the cabin would remain their inheritance for generations, as Lonnie had wished.

Gwen found peace in knowing Lonnie would be proud of her estate plan ensuring their family retreat’s legacy. 

What Is a Beneficiary Deed? How Does It Work to Avoid Probate?

What is a Beneficiary Deed? And How Does it Differ From a Life Estate Deed?

Also referred to as a transfer-on-death deed, a beneficiary deed is a type of deed that facilitates property owners to organize for the property transfer to a beneficiary upon their demise. Beneficiary deeds enable property to transfer outside of probate, allowing heirs to gain ownership more quickly and avoid court fees associated with the probate process. With a beneficiary deed, the property owner retains full interest and control over their property during their lifetime, including the ability to sell or mortgage the property without permission from the beneficiary.

In contrast, a life estate deed transfers property while reserving an interest for the grantor during their lifetime. Upon their death, the grantee fully owns the property. In a life estate deed, the grantor and grantee both have an interest in the property immediately upon signing the deed, with the grantor retaining a life estate and the grantee holding a future interest.

The choice between a beneficiary deed and a life estate deed depends on the property owner’s goals, such as avoiding probate while retaining control or planning for potential Medicaid needs.

Why Are Deeds Important in Estate Planning: The Key to Protecting Your Assets

Navigating the world of estate planning can be complex, but understanding the nuances of life estate deeds can make the process smoother. A life estate deed offers a way to transfer property without going through probate, providing peace of mind to the life tenant and clarity to the remainderman. However, it’s essential to be aware of potential challenges, such as inflexibility and financial responsibilities, and to consult with an estate planning attorney when setting up or managing a life estate deed.

Life estate deeds, while beneficial in many scenarios, aren’t the only estate planning tool available. Other options, such as trusts, TOD deeds, and Lady Bird Deeds, offer different levels of control, flexibility, and protection. It’s essential to consider your specific needs and goals before deciding on the best strategy for your estate planning. Remember, the right planning today can ensure a secure future for your loved ones tomorrow.

Frequently Asked Questions

What are the disadvantages of a life estate deed.

The disadvantages of a life estate deed include potential loss of control over the property and limitation on the ability to sell or mortgage it. Be cautious if considering this type of arrangement.

Can a life estate be revoked?

No, a life estate deed cannot be revoked or sold without the consent of the remainderman.

Can a traditional life estate deed be revoked?  

No, once a person sets up their ownership of a property in a life estate, they cannot revoke or sell the property.

What is an enhanced life estate deed?  

An enhanced life estate deed, also known as a “Lady Bird” deed, provides greater flexibility, allowing the grantor to retain control and the ability to revoke the deed without the remainderman’s consent.

Can life estate deeds be legally challenged?  

Yes, life estate deeds can face legal challenges from disgruntled family members, creditors, or others.

What are the rights and responsibilities of a life tenant? 

The life tenant has the right to possess and use the property during their lifetime or the duration of the designated measuring life. They are responsible for maintaining the property and making any necessary repairs during their tenancy, ensuring that the property is kept in good condition.

Are life tenants responsible for property taxes and insurance? 

Yes, life tenants are typically responsible for paying property taxes, insurance premiums, and any other charges associated with the property during their tenancy.

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What Is a Life Estate Deed?

A life estate deed is one way of transferring ownership of real property that offers a number of estate planning advantages.

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Updated on: August 29, 2024 · 6 min read

How does a life estate work?

Benefits of a life estate deed, the drawbacks of a life estate deed, types of life estates, how to create or dissolve a life estate, other ways to achieve similar results.

A life estate deed is a legal document used in real estate to grant ownership of property to an individual for the duration of their life. When that individual passes away, property ownership automatically transfers to another person or entity of the original owner's choosing. A life estate can ensure your property will transfer to your chosen recipients.

A life estate is a type of holding where you divide ownership into two phases: a life estate and a remainder. As a property owner, you change the ownership so that you only hold the property during your lifetime. This means nothing will be left of your interest to pass on to someone else, such as through your will.

The second phase of ownership is the remainder. The person who owns the remainder takes possession when the life tenant dies. They have an ownership interest during the life tenant's lifetime but do not take possession until that person dies. An example would be where a mother sets up her home, so she has a life estate with her son having the remainder.

The person who owns the real property (in this example, Mom) signs a deed that will pass the ownership of the property automatically upon her death to someone else, known as the "remainderman" (in this example, Son). As part of the deed, Mom keeps what is called a life estate, which means she can continue to live on and use the property for the rest of her life.

She becomes a "life tenant." The deed would normally include language like "to Mom for life, to Son as the remainder."  The life estate deed is completed when Mom signs the document and it is filed with the county.

There are many benefits to creating a life estate deed, sometimes called a life estate trust:

• Avoid probate .  Mom gets to pass her property to Son without its having to go through probate. When she dies, he becomes the owner without a court proceeding
• No will necessary. Mom doesn't have to include the property in a will. She signs the deed and it's done.
• Emotional relief. Mom signs the deed and knows that she doesn't have to worry about what is going to happen to the property after her death.
• Avoid gift tax . Using a life estate property deed can be preferable to an outright gift from Mom to Son during Mom's life, because that could be subject to gift tax.
• A place to live. A life estate deed is often used to provide housing for someone until they die. Mom might own a home in her own name and create a life estate deed that gives her much younger husband (Stepdad) a life estate in the property so Mom can be assured he will always have a place to live. She can leave the remainder to Son, so he will get his inheritance once Stepdad dies.

In addition to benefits, there are some drawbacks that should be considered before deciding on this course.

• Loss of control. While Mom gets to live on the property for the rest of her life, she can't sell it to anyone, take out a mortgage, or control what happens to it after her death. If Son dies before Mom does, his heirs become the remainderman in his place. This might not be what Mom intended, yet she has no control over it.
• No easy reversal. A life estate deed is a legal transfer of title in the property. Mom can't undo it if she changes her mind, unless Son agrees to transfer it back to her.
• Property taxes. Mom must continue to pay property taxes on the home during her life, which would not be the case if she gifted or sold the property to Son during her lifetime.

Life estate types include:

• Life estate with remainder: As described above, the life tenant has ownership and possession during their lifetime, and the remainderman has an ownership interest but does not take possession until the life tenant's death.
• Life estate with reversion: The property owner grants someone else a life estate in the property. When that life tenant dies, the property reverts back to the original owner. A son could give his mother a life estate in his vacation home, and she could live there for her lifetime. When she dies, the son has full ownership.
• Life estate pur autre vie: This type of life estate lasts for the length of one person's life, but it is not the lifetime of the tenant. This is commonly used to provide for a disabled adult child. The parents leave a life estate to the child's caretaker that lasts for the child's life so the child has a place to live. Once the child dies, the property reverts back to the parents' estate.
• Homestead: This life estate is created to protect a home from creditors. For example, in bankruptcy law, state laws may allow you to designate your home as a homestead so that it is not accessible to creditors.

A life estate is created by  executing and filing a new  deed for the property that specifies the life tenant and remainderman. If you are considering setting up a life estate, you should know that it can be challenging to dissolve one once you set it up.

To dissolve a life estate, the life tenant can give their ownership interest to the remainderman. So, if a mother has a life estate and her son has the remainder, she can convey her interest to him, and he will then own the entire interest in the property.

If she wants to actually undo the life estate and get back her ownership of the property, her son must be willing to deed his interest back to her. However, if he doesn't want to do so, his mother has no recourse.

There are other ways to achieve the same outcome as a life estate deed:

Revocable trust

Mom can place the property in a revocable living trust with Son as the trust beneficiary. By doing so, Mom transfers ownership of the home to the trust, yet she can continue to live there for the rest of her life. Mom can set up the trust to distribute the home to Son upon her death. She still avoids probate, yet she has the power to make any change she wants to the trust (including canceling it entirely or changing beneficiaries) at any point in her life.

Sell the property

Another option is for Mom to sell the property to Son during her life. Mom gets the money, which could be used for her care, and Son could agree to let her live there rent-free.

Last will and testament

It is also possible to create a life estate in a will. Mom could leave Stepdad a life estate in the property in her will, with remainder to Son.

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Life Insurance

Does a life assignment deed override a will.

When a person dies, beneficiaries might learn that the decedent made a deed that conflicts with the specific wording in his will. Generally, a deed will override the will. However, which legal document prevails also depends on state property laws and whether the state has adopted the Uniform Probate Code.

Life Assignment

A life assignment is an arrangement in which one person gives another person the right to live at a property until he dies, and then the property passes to the remainderman, or beneficiary. This arrangement allows for possession of a property and ownership of the property to be split between two or more parties. Individuals routinely use this type of arrangement to provide for a spouse or other dependent, then pass the property onto heirs. The advantage of having a life estate is that the property can avoid going through the long and tedious probate process.

A deed transfers legal ownership of a property from one party to another. A life assignment transfers the legal interest to the remainderman and possession to a different party. Assuming that the deed is properly recorded in the county where the property is located, the deed effectively transfers all legal interests to the property, with the exception of any conditions provided in the deed. If a life estate deed is perfected prior to the grantor's death, he does not own the property at the time of his death, so his last will and testament will not apply.

Last Will and Testament

A last will and testament disposes of the property that a person has in her estate at the time of her death. If a person has executed a deed before her death, that property is not part of the person's probate estate and is not subject to any instructions under the will.

A gift that is specifically bequeathed in a will can be destroyed by the process of ademption. This legal term is effectively revoking a gift by destruction, sale or gift to another. The property can be adeemed if the decedent doesn't own it at death. If the specific bequest is not in the decedent's possession when he dies, the named beneficiary does not receive the asset or its cash equivalent.

Uniform Probate Code

Deeds generally override wills in states that recognize common law for their established property laws. However, many states have adopted the Uniform Probate Code. The UPC typically allows for the sale of the specifically-bequeathed property, with proceeds going to the intended beneficiary, so the will can override a deed in this scenario.

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• Boynton Beach Elder Law: Avoiding Probate with the Enhanced Life Estate Deed
• U.S. Legal: Assignments Law and Legal Definition
• Winston Law Group: Understanding the Pros and Cons of a Life Estate
• US Legal: Ademption Law and Legal Definition
• Living Trust Network: Last Wills and Testaments
• Smith, Gambrell & Russell: To Adeem or Not to Adeeem . . . That Is the Question

Samantha Kemp is a lawyer for a general practice firm. She has been writing professionally since 2009. Her articles focus on legal issues, personal finance, business and education. Kemp acquired her JD from the University of Arkansas School of Law. She also has degrees in economics and business and teaching.

Deed of Assignment (for Intellectual Property)

In the realm of intellectual property, a Deed of Assignment is a formal legal document used to transfer all rights, title, and interest in intellectual property from the assignor (original owner) to the assignee (new owner). This is crucial for the correct transfer of patents, copyrights, trademarks, and other IP rights. The deed typically requires specific legal formalities, sometimes notarization, to ensure it is legally enforceable.

To be legally effective a deed of assignment must contain:

• Title of the Document : It should clearly be labeled as a "Deed of Assignment" to identify the nature of the document.
• Date : The date on which the deed is executed should be clearly mentioned.
• Parties Involved : Full names and addresses of both the assignor (the party transferring the rights) and the assignee (the party receiving the rights). This identifies the parties to the agreement.
• Recitals : This section provides the background of the transaction. It typically includes details about the ownership of the assignor and the intention behind the assignment.
• Definition and Interpretation : Any terms used within the deed that have specific meanings should be clearly defined in this section.
• Description of the Property or Rights : A detailed description of the property or rights being assigned. For intellectual property, this would include details like patent numbers, trademark registrations , or descriptions of the copyrighted material.
• Terms of Assignment : This should include the extent of the rights being transferred, any conditions or limitations on the assignment, and any obligations the assignor or assignee must fulfill as part of the agreement.
• Warranties and Representations : The assignor typically makes certain warranties regarding their ownership of the property and the absence of encumbrances or third-party claims against it.
• Governing Law : The deed should specify which jurisdiction's laws govern the interpretation and enforcement of the agreement.
• Execution and Witnesses : The deed must be signed by both parties, and depending on jurisdictional requirements, it may also need to be witnessed and possibly notarized.
• Schedules or Annexures : If there are detailed lists or descriptions (like a list of patent numbers or property descriptions), these are often attached as schedules to the main body of the deed.

Letter of Assignment (for Trademarks and Patents)

This is a less formal document compared to the Deed of Assignment and is often used to record the assignment of rights or licensing of intellectual property on a temporary or limited basis. While it can outline the terms of the assignment, it may not be sufficient for the full transfer of legal title of IP rights. It's more commonly used in situations like assigning the rights to use a copyrighted work or a trademark license.

For example, company X allows company Y to use their trademark for specific products in a specific country for a specific period.  

At the same time, company X can use a Letter of Assignment to transfer a trademark to someone. In this case, it will be similar to the Deed of Assignment. 

Intellectual Property Sales Agreement

An IP Sales Agreement is a detailed contract that stipulates the terms and conditions of the sale of intellectual property. It covers aspects such as the specific rights being sold, payment terms, warranties regarding the ownership and validity of the IP, and any limitations or conditions on the use of the IP. This document is essential in transactions involving the sale of IP assets.

However, clients usually prefer to keep this document confidential and prepare special deeds of assignment or letter of assignment for different countries.

IP Transfer Declaration

In the context of intellectual property, a Declaration is often used to assert ownership or the originality of an IP asset. For example, inventors may use declarations in patent applications to declare their invention is original, or authors may use it to assert copyright ownership. It's a formal statement, sometimes required by IP offices or courts.

When assigning a trademark, the Declaration can be a valid document to function as a proof of the transfer. For example, a director of company X declares that the company had sold its Intellectual Property to company Y. 

Merger Document

When companies or entities with significant IP assets merge, an IP Merger Document is used. This document outlines how the intellectual property owned by the merging entities will be combined or managed. It includes details about the transfer, integration, or handling of patents, copyrights, trademarks, and any other intellectual property affected by the merger.

In all these cases, the precise drafting of documents is critical to ensure that IP rights are adequately protected and transferred. Legal advice is often necessary to navigate the complexities of intellectual property laws.

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Wills and Directives

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Transfer on Death Deeds (TODD) & Lady Bird Deeds

A transfer on death deed (TODD) is a legal document that allows a person to transfer ownership of their property after they die. By using a TODD, a person can transfer the property directly without going through probate.

This procedure can be used for property like land, houses, buildings, and vehicles. A person may choose to leave the property to one or more people (referred to as "beneficiaries"). Additionally, organizations like charities or religious institutions can also be beneficiaries. If a person changes their mind about transferring property to a beneficiary, they can cancel the TODD.

The records must be recorded before the property holder's death. Transfer on death deeds are recorded in the county the property is located in. Check with the county clerk's office for records of existing transfer on death deeds.

Enhanced life estate deeds (often called Lady Bird deeds) are similar to TODDs but have a few key differences. A Lady Bird deed is a type of life estate deed that allows an owner to designate a beneficiary but still make decisions about the property. The owner can choose to sell or mortgage the property without the permission of the beneficiary.

Like a TODD, the property will automatically transfer to the beneficiary after the owner's death. Unlike a TODD, a Lady Bird deed can be executed by an agent with power of attorney over the owner.

• Texas Estates Code, Chapter 114 This chapter of the Texas Estates Code governs transfer on death deeds in Texas.

Understanding the Law

• Transfer on Death Deed (TODD): Information and Answers (TexasLawHelp.org) This FAQ provides a helpful explanation of how a transfer on death deed (TODD) works and answers other basic questions on the topic.
• Transfer on Death Deeds This post from Texas Agriculture Law Blog helps answer many questions about transfer on death deeds (or TODD), including basic functions and pros and cons.
• Transferring Property Prior to Death: Pros, Cons, and Alternatives (Texas Agriculture Law Blog) This blog post outlines some of the typical pros and cons that come with transferring real property prior to death instead of waiting for it to pass through a will.
• Enhanced Life Estate Deeds (aka Lady Bird Deeds) Informative blog post on enhanced life estate deeds (frequently referred to as "Lady Bird deeds") from the Texas Agriculture Law Blog.

• Transfer on Death Deed Kit (TexasLawHelp.org) Pass on your house or land without a will.
• Transfer on Death Deed (eFileTexas.gov) eFileTexas's self-help section contains an interactive interview that will help you create completed forms for a transfer on death deed. Select "transfer on death deed" from the list of types of filings.
• Cancellation of Transfer on Death Deed (eFileTexas.gov) Use these guided forms to cancel a transfer on death deed you have created. Sometimes called a "revocation." Select "cancellation of transfer on death deed" from the list of types of filings.
• Texas Transfer Toolkit (TAJC) This toolkit from the Texas Access to Justice Commission includes information, instructions, and forms for a Transfer on Death Deed and a Cancellation of a Transfer on Death Deed, Affidavit of Death, Beneficiary Designation for a Motor Vehicle and Application for Texas Title and/or Registration.

Motor Vehicles

Transfer a car, truck, or other motor vehicle to a person of your choosing after your death with the procedures and forms created by the Texas Department of Motor Vehicles . You will need to fill out paperwork to declare a beneficiary and add the person to the title and registration. The completed forms are filed with your county’s tax assessor-collector’s office.

• Naming a TOD Beneficiary for Your Car (Nolo) This article from Nolo, a legal encyclopedia, explains how transfers on death procedures for vehicles work in many states, including Texas.
• Transfer a Motor Vehicle After Death (TexasLawHelp.org) Pass on your vehicle to a beneficiary after your death.

Bank Accounts

Certain types of bank accounts (called payable on death or POD accounts) allow the account holder to designate one or more beneficiaries.

This allows the funds to be transferred to the beneficiaries after death without court involvement. To retrieve the funds after the account owner's death, the beneficiary will need to provide the bank with a copy of the death certificate.

Banks typically create their own forms for this procedure, so ask your bank about what is needed to add a beneficiary to your account.

• Texas Estates Code, Chapter 13 This chapter sets out requirements and procedures for payable on death bank accounts in Texas.
• Payable on Death Bank Accounts (TexasLawHelp.org) This article answers basic questions about how payable on death accounts work, who should use them, and how to set one up.
• POD Bank Accounts (Nolo) This collection of articles from Nolo, a legal encyclopedia, addresses different aspects of POD bank accounts, beneficiaries, and more.
• Payable on Death (POD) Account: Definition, Uses (Nerdwallet) This article from Nerdwallet, an online financial information site, describes the pros and cons of using a POD account.
• Elder Law Handbook (Houston Bar Association) Page 49 of the Elder Law Handbook discusses bank accounts and safe deposit boxes.
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Right of Occupancy vs Life Estate: What's the Difference?

Written by Troy Werner

Troy Werner has been an indispensable asset to The Werner Law Firm since joining in 2009, providing exceptional legal service to its clients.

A life estate, or a lifetime estate, is a form of property ownership wherein one party is given the right of occupancy to the property for the rest of their life in the form of a transferable title (the life tenancy), while another party holds property and gains total control over it once the life […]

A life estate, or a lifetime estate , is a form of property ownership wherein one party is given the right of occupancy to the property for the rest of their life in the form of a transferable title (the life tenancy), while another party holds property and gains total control over it once the life tenant passes away (the remainderman). The life tenant cannot sell the property, but they can sell their interest in it.

What Is a Right of Occupancy?

A right of occupancy, on the other hand, usually refers to a personal right of occupancy that cannot be sold or transferred. There may be other conditions attached to either the life estate or the right of occupancy based on the language used in the deed, which can be very flexible. There are no clear legal distinctions between one or the other, and individual life estates or legal agreements constituting a right of occupancy will differ heavily from case-to-case.

One could state that the main difference between the two is that a right of occupancy is generally a personal agreement allowing someone to live in a home for as long as they need to, while a life estate is a right of occupancy that can be transferred or sold (although once the life estate ends, the property reverts to the remainderman or their estate).

What Is a Life Estate?

A life estate is a form of ownership designated through a deed. This specifically outlines the details of the life estate, including the identities of the life tenant and remainderman. A grantor typically sets up a life estate, for themselves or someone else. The language around life estates is flexible enough that any deed specifying that one party retains a lifetime right of occupancy while the other party acts as a remainderman is considered a life estate - a form of joint property ownership .

A situation where a life estate would be applicable would be in the case of a property owner with children from a previous marriage , and a new partner. They may wish to bequeath their home to their children but would like their partner to retain the right to live in the home for as long as they wish, and retain other beneficial use rights, such as the right to receive income from the property. Thus, they set up a life estate naming their partner as the life tenant, and one of their children as the remainderman.

If the life tenant consents, they may forfeit their life tenancy and void the life estate, usually by selling their interest to the remainderman. The value of that interest is based on their age and life expectancy. They can also sell their interest in the life tenancy to someone else, or, depending on the agreement, rent the property out and collect income. If another person buys into the life estate, their right of occupancy is tied to the original tenant’s life.

Even if the new buyer outlives the life tenant, the life estate’s duration is fixed upon one person’s life expectancy. Should that person die, even if they are no longer the tenant, the life estate ends and the property passes onto the remainderman, who can then do with it as they please (including selling the property).

What Does a Life Tenant Own?

A life tenant owns their interest in the property, which allows them to occupy it for as long as they are alive. Depending on the language used in the life estate, this right is transferable. The language used to write up the deed will determine the extent to which a life tenant can flex their right of occupancy.

For example, the grantor can include language in the life estate to make it so that if a life tenant moves out, the tenancy ends. Otherwise, the remainderman may have to buy out the remainder of the life tenant’s interest before they die if both the tenant and the remainderman wish to end the life estate.

The life tenant does not own the property outright, nor will they ever have the right to sell it within the bounds of the life estate. While a remainderman (or anyone inheriting the remainderman’s right to the property) will eventually have full ownership over the property once the life estate ends, the life tenant only ever retains control and right of occupancy.

Some agreements include provisions to allow either the life tenant or the remainderman to rent the property out to a third party, provided the life tenant is living elsewhere, and receives all the proceeds from the rent (as per the definition of beneficial use). This can be useful in times where the life tenant must move someplace else, due to medical reasons, such as a care home or hospice.

The proceeds from the rent could help cover medical expenses or provide an additional income aside from a pension or other benefits. In most cases, the life tenant is also responsible for the upkeep of the property, as well as any associated maintenance and utility fees, and property taxes. A life tenant can also choose to sell their interest in the property.

A life estate may be written to be rendered void if certain conditions aren’t honored, such as the life tenant’s obligation to keep the property in good shape, or even something as specific as their marital status (i.e. if the life tenant remarries, the life estate ends).

Is a Life Estate Right for You?

There are upsides and downsides to setting up a life estate. Most notably , it allows property to pass to the remainderman without probate. However, if the remainderman dies before the life tenant does, it usually goes to their estate, and thereby through probate. You can assign a secondary remainderman (the first remainderman’s heir, for example) to avoid this issue, but this can complicate things.

Examining the situation and weighing your options with a legal professional is necessary. There is no way to determine whether a life estate would suit your estate planning needs, or whether there is an alternative arrangement to consider (not to mention the specific language to be used) without individual legal help.

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Deed of Assignment and the Notice of Assignment -What is the Difference?

In this article, Richard Gray barrister takes a brief look at the differences between a Deed of Assignment and a Notice of Assignment and the effect of the assignment on the contracting party

At the end of 2020, Elysium Law were instructed to act for a significant number of clients in relation to claims made by a company known as Felicitas Solutions Ltd (an Isle of Man Company) for recovery of loans which had been assigned out of various trust companies following loan planning entered into by various employees/contractors.

Following our detailed response, as to which please see the article on our website written by my colleague Ruby Keeler-Williams , the threatened litigation by way of debt claims seem to disappear. It is important to note that the original loans had been assigned by various Trustees to Felicitas, by reason of which, Felicitas stood in the shoes of the original creditor, which allowed the threatened action to be pursued.

After a period of inertia, Our Clients, as well as others, have been served with demand letters by a new assignee known as West 28 th Street Ltd . Accompanying the demand letters is a Notice of Assignment, by reason of which the Assignee has informed the alleged debtor of the Assignees right to enforce the debt.

Following two conferences we held last week and a number of phone call enquiries which we have received, we have been asked to comment upon the purport and effect of the Notice of Assignment, which the alleged debtors have received. Questions such as what does this mean (relating to the content) but more importantly is the ‘Notice’ valid?

Here I want to look briefly at the differences between the two documents.

There is no need for payment to make the assignment valid and therefore it is normally created by Deed.

 The creation of a legal assignment is governed by Section 136 of the Law of Property Act 1925:

136 Legal assignments of things in action.

(1)Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice—

(a) the legal right to such debt or thing in action;

(b) all legal and other remedies for the same; and

(c) the power to give a good discharge for the same without the concurrence of the assignor:

Some of the basic requirements for a legal assignment are;

• The assignment must not be subject to conditions.
• The rights to be assigned must not relate to only part of a debt, or other legal chose in action.
• The assignment must be in writing and signed by the assignor.
• The other party or parties to the agreement must be given notice of the assignment.

Notice of assignment

To create a legal assignment, section 136 requires that express notice in writing of the assignment must be given to the other contracting party (the debtor).

Notice must be in writing

Section 136 of the LPA 1925 requires “express notice in writing” to be given to the other original contracting party (or parties).

 Must the notice take any particular form?

The short answer is no. Other than the requirement that it is in writing, there is no prescribed form for the notice of assignment or its contents. However, common sense suggests that the notice must clearly identify the agreement concerned.

Can we  challenge the Notice?

No. You can challenge the validity of the assignment assignment by ‘attacking the Deed, which must conform with Section 136. In this specific case, the Notice sent by West 28 th Street in itself is valid. Clearly, any claims made must be effected by a compliant Deed and it is that which will require detailed consideration before any right to claim under the alleged debt is considered.

Can I demand sight of the assignment agreement

On receiving a notice of assignment, you may seek to satisfy yourself that the assignment has in fact taken place. The Court of Appeal has confirmed that this is a valid concern, but that does not give an automatic right to require sight of the assignment agreement.

In Van Lynn Developments Limited v Pelias Construction Co [1969]1QB 607  Lord  Denning said:

“After receiving the notice, the debtor will be entitled, of course, to require a sight of the assignment so as to be satisfied that it is valid…”

The Court of Appeal subsequently confirmed this  stating the contracting party is entitled to satisfy itself that a valid absolute assignment has taken place, so that it can be confident the assignee can give it a good discharge of its obligations

The important document is the Deed of Assignment, which sets out the rights assigned by the Assignor. The Notice of Assignment is simply a communication that there has been an assignment. The deed is governed by Section 136 of the LP 1925. It should be possible to obtain a copy of the Deed prior to any action taken in respect of it.

For more information on the claims by West 28 th Street or if advice is needed on the drafting of a Deed, then please call us on 0151-328-1968 or visit www.elysium-law.com .

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Deed of assignment | Practical Law

Deed of assignment

Practical law anz standard document w-002-8276  (approx. 19 pages).

Deed of Assignment: Everything You Need to Know

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. 3 min read updated on January 01, 2024

Updated October 8,2020:

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. It states that a specific piece of property will belong to the assignee and no longer belong to the assignor starting from a specified date. In order to be valid, a deed of assignment must contain certain types of information and meet a number of requirements.

What Is an Assignment?

An assignment is similar to an outright transfer, but it is slightly different. It takes place when one of two parties who have entered into a contract decides to transfer all of his or her rights and obligations to a third party and completely remove himself or herself from the contract.

Also called the assignee, the third party effectively replaces the former contracting party and consequently assumes all of his or her rights and obligations. Unless it is stated in the original contract, both parties to the initial contract are typically required to express approval of an assignment before it can occur. When you sell a piece of property, you are making an assignment of it to the buyer through the paperwork you sign at closing.

What Is a Deed of Assignment?

A deed of assignment refers to a legal document that facilitates the legal transfer of ownership of real estate property. It is an important document that must be securely stored at all times, especially in the case of real estate.

In general, this document can be described as a document that is drafted and signed to promise or guarantee the transfer of ownership of a real estate property on a specified date. In other words, it serves as the evidence of the transfer of ownership of the property, with the stipulation that there is a certain timeframe in which actual ownership will begin.

The deed of assignment is the main document between the seller and buyer that proves ownership in favor of the seller. The party who is transferring his or her rights to the property is known as the “assignor,” while the party who is receiving the rights is called the “assignee.”

A deed of assignment is required in many different situations, the most common of which is the transfer of ownership of a property. For example, a developer of a new house has to sign a deed of assignment with a buyer, stating that the house will belong to him or her on a certain date. Nevertheless, the buyer may want to sell the house to someone else in the future, which will also require the signing of a deed of assignment.

This document is necessary because it serves as a temporary title deed in the event that the actual title deed for the house has not been issued. For every piece of property that will be sold before the issuance of a title deed, a deed of assignment will be required.

Requirements for a Deed of Assignment

In order to be legally enforceable, an absolute sale deed must provide a clear description of the property being transferred, such as its address or other information that distinguishes it from other properties. In addition, it must clearly identify the buyer and seller and state the date when the transfer will become legally effective, the purchase price, and other relevant information.

In today's real estate transactions, contracting parties usually use an ancillary real estate sale contract in an attempt to cram all the required information into a deed. Nonetheless, the information found in the contract must be referenced by the deed.

Information to Include in a Deed of Assignment

• Names of parties to the agreement
• Addresses of the parties and how they are binding on the parties' successors, friends, and other people who represent them in any capacity
• History of the property being transferred, from the time it was first acquired to the time it is about to be sold
• Agreed price of the property
• Size and description of the property
• Promises or covenants the parties will undertake to execute the deed
• Signatures of the parties
• Section for the Governors Consent or Commissioner of Oaths to sign and verify the agreement

If you need help understanding, drafting, or signing a deed of assignment, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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DEED OF ASSIGNMENT: EVERYTHING YOU NEED TO KNOW.

A Deed of Assignment refers to a legal document in which an assignor states his willingness to assign the ownership of his property to the assignee. The Deed of Assignment is required to effect a transfer of property and to show the legal right to possess it. It is always a subject of debate whether Deed of Assignment is a contract; a Deed of Assignment is actually a contract where the owner (the “assignor”) transfers ownership over certain property to another person (the “assignee”) by way of assignment. As a result of the assignment, the assignee steps into the shoes of the assignor and assumes all the rights and obligations pertaining to the property.

In Nigeria, a Deed of Assignment is one of the legal documents that transfer authentic legal ownership in a property. There are several other documents like a deed of gifts, Assent, etc. However, this article focuses on the deed of assignment.

It is the written proof of ownership that stipulates the kind of rights or interests being transferred to the buyer which is a legal interest.

Read Also: DIFFERENCE BETWEEN TRANSFER OF PROPERTY THROUGH WILLS AND DEED OF GIFT

CONTENTS OF A DEED OF ASSIGNMENT

Content of a Deed of Assignment matters a lot to the transaction and special skill is needed for a hitch-free transaction. The contents of a deed of assignment can be divided into 3 namely; the introductory part, the second (usually the operative part), and the concluding part.

• THE INTRODUCTORY PART: This part enumerates the preliminary matters such as the commencement date, parties in the transaction, and recitals. The parties mentioned in the deed must be legal persons which can consist of natural persons and entities with corporate personality, the name, address, and status of the parties must be included. The proper descriptions of the parties are the assignor (seller) and assignee (buyer). The Recitals give the material facts constituting the background to the current transaction in chronological order.
• THE SECOND PART (USUALLY THE OPERATIVE PART): This is the part where the interest or title in the property is actually transferred from the assignor to the assignee. It is more like the engine room of the deed of assignment. The operative part usually starts with testatum and it provides for other important clauses such as the consideration (price) of the property, the accepted receipt by the assignor, the description of the property, and the terms and conditions of the transaction.
• The testimonium : this shows that all the parties are involved in the execution of the deed.
• Execution : this means signing. The capacity of the parties (either individual, corporate bodies, illiterates) is of great essence in the mode of execution.  It is important to note that the type of parties involved determines how they will sign. Example 2 directors or a director/secretary will sign if a company is involved. In the same way, if an association, couple, individual, illiterate, family land (omonile), firm, unregistered association, etc. is involved the format of signature would be different.
• Attestation : this refers to the witnessing of the execution of the deed by witnesses.

For a Deed of Assignment to be effective, it must include a column for the Governor of the state or a representative of the Government where the property is, to sign/consent to the transaction. By virtue of Sec. 22 of the Land Use Act, and Sec. 10 Land Instrument Registration Law, the Governor must consent to the transaction.

Do you have any further questions? feel free to call Ibejulekkilawyer on 08034869295 or send a mail to [email protected] and we shall respond accordingly.

Disclaimer: The above is for information purposes only and should not be construed as legal advice. Ibejulekkilawyer.com (blog) shall not be liable to any person(s) for any damage or liability arising whatsoever following the reliance of the information contained herein. Consult us or your legal practitioner for legal advice.

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