Can I avoid probate of my homestead without using a revocable trust?

I frequently have clients that come to me because they have been told that they need to put their house into a revocable living trust in order to avoid probate.  Many times, this is the only major asset they own, and with the property values having plummeted in recent years, it may not be worth it to incur the expense of setting up a revocable trust.  My response is that they do not need to spend the money on a trust, if their only concern is to avoid the probate of their home.

They can execute an enhanced life estate deed (also known as a “ladybird” deed) in which they give themselves the right to live in their home for the rest of their life (but, they retain the right to sell, mortgage, rent, etc., the property during their lifetime), and if they still own the property at their death, the remainder interest will pass to whomever they list in the deed.  Essentially, this avoids probate, as the remainder person need only record the death certificate of the life tenant at the life tenant’s death, and title passes to the remainder person.

This sounds like such a wonderful tool, doesn’t it?
I do believe that it is a good tool to use, however, it should be used with care.  Some lenders and title underwriters are uncomfortable with this arrangement and it may make it difficult for you to get refinancing or selling the property without the remainder persons signing off on the deed (even though there is language in the deed stating that is not necessary).

Of course, before you make any decisions about your estate, it is prudent to discuss your individual case with an estate planning attorney.