Lady Bird Deeds are a popular estate planning tool in Texas that allow property owners to retain a life estate while transferring their property to a designated beneficiary upon death.
The key benefit is that they can be revoked if situations or desires change. But what about joint Lady Bird Deeds executed by both spouses? Can they be revoked after one of the spouses dies?
The recent Wright v. Jones, No. 10-21-00297-CV (Tex. App.–Waco [10th Dist.] 2023) case addresses whether jointly-executed Lady Bird Deeds can be revoked after one of the spouses passes away.
Facts & Procedural History
A married couple (the grantors) executed a Lady Bird Deed for their real estate. The deed reserved life estates for both of them. The deed provided that upon the death of the surviving grantor, the property would transfer to the designated beneficiary (the grantee), their son.
The husband died first. Upon the husband’s death, his share of the community estate was granted to his son.
A year after the husband’s death, the decedent’s wife executed a durable power of attorney and named one of her step-daughters as her agent. A couple of years later, the step-daughter made a filing to revoke the Lady Bird Deed.
The son changed the locks on the property and was not allowing the wife’s daughter to access the property. Litigation ensued.
Texas Lady Bird Deed
A Lady Bird Deed allows a property owner to retain a life estate. This allows the property owner to to use and profit from the real property for the duration of their lives. Simultaneously, the deed designates a remainderman, someone who will inherit the property immediately upon the death of the life estate holder without going through probate.
This is the main advantage of the ladybird deed, as the probate process can be time-consuming, costly, and may delay the transfer of the property to the intended beneficiaries.
Better yet, the deed is not irrevocable–as some trusts are. The property owner can change their minds. They can sell the property without the remainderman’s consent or even revoke the deed.
Texas Community Property Laws
To fully understand this case, it is important to examine how Texas community property laws interact with Lady Bird Deeds.
Texas is a community property state. This means that any property acquired by a married couple while living in Texas is considered jointly owned by the marital community, with each spouse owning an undivided one-half interest.
When one spouse in a community property marriage dies, their one-half interest in the community property does not automatically pass to the surviving spouse. Rather, the deceased spouse maintains the right to devise their one-half interest to any beneficiaries they choose.
This is where Texas community property laws intersect with Lady Bird Deeds. When a married couple executes a joint Lady Bird Deed reserving life estates, they are devising their respective one-half interests to pass to the remainder beneficiary upon their deaths.
Irrevocability of the Joint Lady Bird Deed
This brings us back to this case. This case addresses the question as to whether a joint Lady Bird Deed can be revoked after one of the spouse’s dies.
The husband’s son argued that the court erred in finding that he had no rights to the property in question. When analyzing the language of the deed, the court found that the spouses each reserved one-half interest on the property through their life estate. Importantly, there was no language in the Lady Bird Deed that stated that upon a spouse’s death, their half of the estate would revert back to their surviving spouse.
The appeals court conclued that the Lady Bird Deed could not be revoked. The absence of this language meant that the surviving spouse did not have control over the one half interest in the property. Put another way, the Lady Bird Deed was irrevocable as to that one half interest. This resulted in the husband’s son being entitled to his father’s half of the property as per the Lady Bird Deed.
Language for Joint Lady Bird Deeds
Here are some examples of language that could be included in a Lady Bird Deed to avoid the irrevocability issues that arose in this case:
- Right of Survivorship Clause: “Upon the death of either Grantor, the deceased Grantor’s interest in the Property shall pass to the surviving Grantor.”
- Revocation Clause: “This Lady Bird Deed may be revoked in whole or in part by the surviving Grantor following the death of the other Grantor by filing a Revocation of Lady Bird Deed with the County Clerk.”
- Remainder Contingency: “Upon the death of the first Grantor, the remainder interest conveyed herein shall vest in the Grantee only if the surviving Grantor does not revoke this Lady Bird Deed within 6 months of the first Grantor’s death.”
- Spousal Consent Requirement: “During the lifetimes of both Grantors, this Lady Bird Deed may not be revoked without the written consent of both Grantors. After the death of the first Grantor, the surviving Grantor may unilaterally revoke this deed.”
- Testamentary Power: “Each Grantor retains full testamentary power over their respective one-half interest in the Property and may alter the disposition of their interest by Will.”
As you can see, the key is to expressly address revocability, survivorship rights, and testamentary powers over each spouse’s one-half interest. This will help avoid ambiguity and make the intended treatment of the property clear.
This case shows that Lady Bird Deeds can become irrevocable upon the death of one of the spouses, even though they are generally revocable during the grantor’s lifetime. If the deed does not contain language allowing the surviving spouse to revoke the deceased spouse’s share, then that share will transfer to the remainder beneficiary as stipulated in the deed. This case underscores the importance of carefully drafting Lady Bird Deeds to account for the grantors’ intentions regarding revocability after the death of the first spouse. Without clear language permitting revocation, the deceased spouse’s share will pass outside of probate to the designated remainder beneficiary.
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