I used your “service” and created a TOD (Texas) deed. My atty says I need a Lady Bird Deed. I’ve printed out the pros and cons of each and don’t understand why I need a Lady Bird Deed. Both avoid probate. Medicaid is not a factor. Maintaining a homestead exemption is not a factor. Do you avoid capital gains with the TOD deed?
Do you send the answer to my question in an email to me? Thanks. Robert Kukla
Because we are not a law firm, we cannot give legal advice (and certainly wouldn’t contradict your attorney). We have discussed this issue in our sections on using deeds to avoid probate of real estate in Texas, our discussion of Texas deeds and Medicaid asset protection, and in our discussion of Texas Lady Bird Deeds. You would need to ask your attorney why, specifically, he or she recommends a Lady Bird Deed over a Transfer-On-Death Deed. It could be that Lady Bird Deeds have been around longer (Transfer-On-Death Deeds were not authorized until 2015) and the attorney is just more familiar with them. It could also have to do with the requirements of the title insurance company that the attorney works with. But all that we can do is guess. The attorney would need to explain why he or she is reluctant to use these deeds, especially given that (unlike Lady Bird Deeds) they are specifically authorized by the Texas Code.
There should not be any capital gains tax difference between Lady Bird Deeds and Transfer-On-Death Deeds. Both are incomplete gifts for federal gift and estate tax purposes (since the owner retains all rights until death), and consequently both should be entitled to a full basis step-up at death. The full basis step-up essentially erases any capital gain that may have accrued in the property prior to death. Don’t take this to be tax advice, though, without discussing it with your tax adviser.
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Disclaimer: Your use of DeedClaim.com to prepare your own deed does not create an attorney-client relationship. DeedClaim.com is not a law firm and our services are not a substitute for legal advice. You should not take anything contained in this response or published on DeedClaim.com to be legal advice about your specific situation or make any decisions based on it.