North Carolina Estate Planning Blog : North Carolina Estate Planning Lawyer & Attorney : Trust Counsel, PA : Trust Administration : Serving Chapel Hill, Durham, Raleigh, Pittsboro, Orange County, Chatham County

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By Chris Burti, Vice President, Senior Legal Counsel, Statewide Title, Inc.

Elder Law is becoming a burgeoning practice area as the Baby Boomer Generation is rapidly beginning to gray out. This group has arguably accumulated more wealth as a group than any prior generation and has paid more taxes to support entitlement programs than any have previously. Not surprisingly, its members are trying to retain as much of this wealth as possible and pass it on to the next generation while lawfully maximizing their rights to participate in governmental entitlement programs. The Federal Government’s attempts to cut costs by restricting these entitlements has given rise to a concentrated effort among Elder Law practitioners to develop mechanisms to legally retain assets within the family while qualifying for benefits.

Two devices currently employed in North Carolina with increasing frequency are deeds containing powers of appointment. Those containing a testamentary power to a specified class are often referred to as “enhanced life estate" deeds and those permitting discretionary disposition by deed are often called ‘Ladybird’ deeds. Because there is no express statutory law authorizing the use of these types of conveyances and because there is little common law defining the parameters of their use, practitioners have little to guide them as regards their efficacy.

One potential solution may be forthcoming from the National Conference of Commissioners on Uniform State Laws, (NCCUSL). NCCUSL works to draft uniform laws that provide consistency from state to state. The solution may be in a proposal for a uniform act providing for revocable deeds conveying real estate effective upon the death of the grantor. The background and issues memorandum prepared for the first meeting of the Drafting Committee for Uniform Transfer-on-Death for Real Property Act observes that one of “the main innovations in the property law of the twentieth century was the development of will substitutes for the transfer of property at death. By these mechanisms, an owner may designate beneficiaries to receive the property at the owner’s death without waiting for probate and without the beneficiary designation needing to comply with the witnessing requirements of wills.” The memorandum notes that this has primarily applied to personal property, but in a few states these transfers have been extended to land. In most of these jurisdictions this is accomplished by permitting land to be registered in a transfer-on-death (TOD) instrument. The owner identifies the beneficiaries who will take the land at the owner’s death. During the owner’s lifetime, these beneficiaries and their creditors have no interest in the land while the owner retains full power to revoke or amend the beneficiary designation.