14 May NO LADY LUCK FOR SURVIVING SPOUSE (OR HER DAUGHTER) OF JOINT LADYBIRD DEED
A Texas Court of Appeals decision last year illustrates the importance of how a joint ladybird deed is drafted as to ownership of property after one owner dies.
A ladybird deed is also known as an enhanced life estate which reserves a life estate with full power to sell, convey, mortgage or otherwise dispose of the property without the joinder of the remainderman. The grantor also has the power to revoke or change the remainderman.
The court in the case had to decide whether when one joint owner died did his ½ interest go to his surviving wife or to his surviving son who was the remainderman.
Facts: On January 23, 2015, Billy and Jean Wright signed a joint ladybird deed which named Lewis Wright (Billy Wright’s son and Jean Wright’s stepson) as sole grantee (remainderman) of the family home and 10 acres in Navarro County. Typical language was used to make it an enhanced life estate (ladybird deed).
On May 12, 2016, Jean signed a durable power of attorney which named Dorothy Sharkey as her agent regarding real estate, trust, estate and other beneficiary transactions, etc.
Subsequently, Dorothy as Jean’s agent, revoked the ladybird deed and sought to “cancel and revoke any and all interests of the grantee (Lewis) including all present, future, remainder and contingent interests”.
Then, Jean Jones, the daughter of Jean Wright, who lived at the home with Lewis, brought a suit for trespass since Lewis locked her out of the house. Her petition (Jean Wright was living in a nursing home) said Lewis “has no present, future or remainder interest in the property”.
The court had to decide whether Lewis had a one-half ownership interest due to the ladybird deed and have the right to possess and use the property.
Since the trial court issued its ruling by declaratory judgement determining Lewis had no right, title or interest in the property, on appeal Lewis had to demonstrate there was insufficient evidence to support the adverse ruling. The Court of Appeals determined that it must construe the deed as written as a whole as to what the parties intended. The Court of Appeals also cited a case that stated “it is a rule of construction of deeds that deeds are to be most strongly construed against the grantor and in favor of the grantee, and this rule applies to reservations and exceptions”.
The Court concluded that there was no doubt that both Billy and Jean had a life estate which would terminate on the death of the survivor.
However, the Court also cited cases where there could be successive life estates with each estate to begin upon the termination of the preceding life estate. The Court also concluded that the ladybird deed that Billy and Jean created did not expressly create successive life estates that begin on the termination of the preceding life estate. The Court further concluded that each spouse owned a one-half undivided interest in the community property interest regardless of which spouse has management and control. As a result, the court decided that Billy’s one-half interest vested in Lewis immediately when Billy died. Therefore, Jean Wright (through her agent under the power of attorney) could only convey, revoke, etc. her one-half of the property. So, the revocation of the ladybird deed signed by Dorothy (as agent) was ineffective as to Lewis’ interest.
The court also decided that although Billy’s will left his assets to Jean, it determined the deed was not ambiguous on its face – so the will of Billy could not be used to ascertain the intent of the parties to the deed. Furthermore, since Lewis had an immediate possession right, there could not be trespass.
When drafting a joint ladybird deed, the attorney must clearly identify the parties. Whether Billy wanted his interest in the property go to his wife is uncertain, but the court could only go by what he signed.
If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming Estate Planning Essentials workshops by clicking here or calling 214-720-0102. We make it simple to attend and it is without obligation.