Lady Bird Deeds
Avoiding Probate With Enhanced Life Estate Deeds
When considering estate planning, a Lady Bird Deed (also known as an enhanced life estate deed) can be used as an effective tool to allow a homeowner to live in their home for the rest of their life and automatically pass ownership onto whoever is designated in the recorded lady bird deed after the life estate holder is deceased. The lady bird deed in Florida allows you to avoid probate, reserve powers to yourself, maintain Medicaid eligibility, and maintain Homestead exemption.
How does a Lady Bird Deed work?
Because the remainderman have no interest while the life-estate holder is alive, the life-estate holder retains the right to sell, lease, mortgage, encumber, or otherwise transfer ownership interest in the real property without the consent of the remainderman. If there are no changes are made to the deed, passage of title to the intended remainderman is as simple as filing a death certificate of the life-estate holder in the official records in the county in which the property is located.
Think of the lady bird deed as the real estate equivalent of a pay-on-death provision on a bank account. With a pay-on-death account, you can spend the funds in the account during your lifetime and change the beneficiaries at any time, and the beneficiary is only entitled to what remains in the account upon your death.
Disadvantages of a Lady Bird Deed
Homestead Limitations on Devise (transfer)
In efforts to protect a spouse and minor children, Florida Homestead Law states that the Homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child. Art X, §4(1)(c), Fla. Const.
What this means is that if you are married or have minor children, you have to be very careful as to how you wish to devise your property so as to not run afoul of Homestead restrictions.
Additionally, the lady bird deed should be used with caution when there are multiple remainderman. It could be disadvantageous to use a lady bird deed if the remainderman do not get along or if one of them were to pass away while you’re still alive and the deed is not corrected to reflect this.
If one of the remainderman passes away and the deed is not corrected, then probate will be needed to determine that remainderman’s interest. In light of the above facts, overall, the lady bird deed is an excellent tool to utilize when it comes to protecting your family and property during your life and after you pass.
Protect Your Estate Today – Estate Planning Lawyers in Florida – LawyerOfOrlando.com Contact Us Today