What Happens to a Lady Bird Deed with a Civil Judgment?

There are different considerations for lady bird deeds if a money judgment has been issued against either the current owner or the designated remainder beneficiaries.

Judgment Against Current Owner

A lady bird deed does not protect an owner’s real property from creditors, other than a homestead, if there is a recorded civil judgment against the owner. A judgment becomes an automatic lien on all real property owned by the judgment debtor in any county in which the judgment is recorded, with the exception of homestead property.

A judgment lien would automatically attach to any non-homestead property that the debtor has conveyed in a lady bird deed. The judgment lienholder could foreclose the lien on the property.

Judgment Against Remainderman (Designated Beneficiary)

A civil judgment against a named remainderman of a lady bird deed does not affect the owner’s interest in the property during the owner’s lifetime. This is true because the remainderman’s interest in the property does not vest until the owner’s death. Therefore, there is no legal interest to which the judgment can attach as long as the owner lives. Even if there is a judgment against a remainderman of a lady bird deed, the current owner retains full control over the property and is not affected by the judgment.

Tax liens are different. An IRS lien against a remainderman attaches to the property once the remainderman is named on the lady bird deed.

Gideon Alper

About the Author

I’m an attorney who specializes in asset protection planning. I graduated with honors from Emory University Law School and have been practicing law for almost 15 years.

I have helped thousands of clients protect their assets from creditors. Before private practice, I represented the federal government while working for the IRS Office of Chief Counsel.