In Florida, Samantha J. Fitzgerald looks for ways to help her clients avoid probate.
Because probate is a time-consuming and expensive process that can eat up an estate’s assets —leaving little or nothing for heirs to inherit.
One very good way to avoid probate is by use of a “life enhanced estate deed” also known as a “Lady Bird Deed.”
In today’s post, we will touch on what a Lady Bird Deed is, and how it can benefit your estate.
As always, the general information provided here is simply a broad overview and a Lady Bird Deed may not be right for you, so be sure to consult with an experienced estate and probate attorney near you to find out more.
What is a Lady Bird Deed?
The Lady Bird Deed (aka “transfer on death deed” or “enhanced life estate deed”) is a means of transferring real property to your heirs at your death directly——without having to go through probate to do it.
Although it operates like a deed, the Lady Bird is no ordinary deed.
Unlike other deeds (e.g., a grant deed or warranty deed), a Lady Bird Deed:
- allows the current property owner and grantor to retain complete control and full use of the property during his/her lifetime, and
- it automatically transfers to the beneficiary upon the grantor’s death.
In other words, the property owner (who is also the grantor and grantee) retains a life estate in the property.
And, while the property will eventually revert to the named beneficiary as a remainderman, because the owner retains complete control over the property during his/her lifetime—and even retains the right to change his mind about who will get the property after his death—the Lady Bird Deed does not convey a current interest in the property to the beneficiary, and is not considered a completed gift for property or tax purposes.
The property only passes on to the remainderman after the life tenant/owner dies.
The Lady Bird Deed (which, by the way, was not named after Lady Bird Johnson) allows the property owner to keep all the rights to the property during his/her lifetime including the right to mortgage or sell the property.
Why You Might Want to Have a Lady Bird Deed in Your Estate Plan
The Lady Bird Deed has a number of benefits that might make it the right choice for your estate plan.
As noted above, one major benefit is that it allows you pass on your property to your loved ones without having to go through the probate process.
Another benefit is that, unlike a regular life estate which is a joint property ownership that limits what the life tenant can do with the property, a Lady Bird Deed allows the property owner to retain all the rights of ownership during his/her lifetime—including the right to mortgage or sell the property, or even change the beneficiary designation——all without the beneficiary’s consent.
A further benefit of a Lady Bird Deed is that because the remaindermen have no present interest in the property (they will only get it after the grantor’s death), the property is protected from claims from the remainderman’s creditors during the owner’s lifetime.
Another benefit is that, in Florida, a Lady Bird Deed does not affect the homestead characterization of a residence so long as the grantor continues to live in the home.
Also, because a Lady Bird Deed is not considered to be a transfer of an asset, it is a useful tool for people who qualify for Medicaid.
Is a Lady Bird Deed Right for Everyone?
No, of course not.
Lady Bird Deeds do have their disadvantages and because each person’s situation is unique, it may not be right for you.
But they are a very useful estate planning tool that you may want to consider.
Protecting Your Family is Just a Phone Call Away.
Not all estate plans have to be complicated. But they do all need to be carefully crafted and well thought out. Don’t leave planning for your future and that of your loved ones to chance. Here at SJF Law Group, we work hard to ensure that your wishes will be followed, and your loved ones taken care of when you are gone. When you work with the estate planning attorneys at SJF Law Group, you get more than just an estate plan: you get peace of mind. Call us at 954-580-3690 or email us at: [email protected] today.