For most Florida families, the house is the single most valuable thing they own. It is also the asset most likely to get stuck in probate. If your home is titled only in your name when you pass away, your loved ones generally cannot sell it, refinance it or even put it in their own names until a probate court gives them permission. That can take months and cost thousands of dollars.

A Lady Bird deed, known more formally in Florida as an enhanced life estate deed, is one of the simplest ways to avoid that outcome. At Florida Planning & Probate, we prepare these deeds for homeowners throughout Sunrise, Weston, Plantation, Pembroke Pines and the Fort Lauderdale area. Here is what you should know before deciding whether one is right for you.

WHAT IS A LADY BIRD DEED?

A Lady Bird deed is a deed you sign while you are alive that names who will receive your property when you die. You keep a life estate, meaning the right to live in, use and control the property for the rest of your life, and the people you name (the “remainder beneficiaries”) receive the property automatically at your death.

What makes the deed “enhanced” is a reserved-powers clause. That clause lets you sell, mortgage, lease or give away the property, or change the beneficiaries, at any time and without asking the beneficiaries for permission or signatures. Florida does not have a statute that creates these deeds; they are recognized through Florida case law and title standards, which is why careful drafting matters.

LADY BIRD DEED vs. A TRADITIONAL LIFE ESTATE DEED

With an ordinary life estate deed, the beneficiaries receive a vested interest the day the deed is signed. If you later want to sell or refinance, every beneficiary (and sometimes their spouses) must sign. If one of them is going through a divorce, has a judgment against them or simply disagrees, you can be stuck.

With an enhanced life estate deed, you keep full control. The beneficiaries only receive the property if you still own it when you die.

BENEFITS OF A LADY BIRD DEED IN FLORIDA

• Avoids probate for the property. After your death, the beneficiaries generally record a certified copy of the death certificate in the county records, and title passes to them without a court proceeding.
• You keep complete control. You can sell, refinance or change your mind at any time, just as if you had never signed the deed.
• Your homestead exemption stays in place. Because you keep a life estate, your Florida homestead exemption and Save Our Homes assessment cap generally continue during your lifetime. (Learn more in our article on Florida homestead protection laws.)
• Potential income tax savings. Because you keep control of the property until death, your beneficiaries typically receive a “stepped-up” tax basis equal to the value on the date of death, which can greatly reduce capital gains tax if they later sell.
• Medicaid planning advantages. Florida’s Medicaid estate recovery program generally reaches only assets that pass through probate. Property that passes under a Lady Bird deed is generally outside of that probate estate.
• Simple and affordable. For many homeowners, a Lady Bird deed costs far less than a full probate administration later.

Consultation Call Today: 954-557-7368

FLORIDA HOMESTEAD RULES CAN LIMIT WHO RECEIVES YOUR HOME

Florida’s Constitution restricts how a homestead can pass when the owner is survived by a spouse or a minor child. If you are married or have a minor child, a Lady Bird deed that leaves your home to someone else can fail unless the proper steps are taken, such as having your spouse join in the deed or sign a valid waiver of homestead rights. Title companies look closely at this issue, and a deed that ignores it can leave your family with a cloud on title and a trip to probate anyway.

LIMITATIONS TO CONSIDER

A Lady Bird deed is a powerful tool, but it is not a complete estate plan. Keep these limitations in mind:

• It only covers one property. Bank accounts, investments, vehicles and other real estate need their own planning.
• It does nothing if you become incapacitated. If you cannot manage your affairs, someone may still need authority under a durable power of attorney to handle the property.
• The beneficiaries receive the property outright. There is no built-in way to hold the home for a minor, protect it from a beneficiary’s creditors or divorce after your death, or preserve government benefits for a loved one with a disability. In those cases, a trust, such as a special needs trust, is often the better choice.
• If a beneficiary dies before you, their share may end up in their own probate estate unless the deed names contingent beneficiaries.
• The deed is public record, unlike a revocable living trust.

LADY BIRD DEED OR REVOCABLE LIVING TRUST?

Both a Lady Bird deed and a revocable living trust can keep your home out of probate. A Lady Bird deed is quicker and less expensive for a single property with straightforward beneficiaries. A living trust costs more up front but can hold all of your assets, manage them if you become incapacitated, and control how and when your beneficiaries receive their inheritance. Many clients use both: a trust for the overall plan and a Lady Bird deed naming the trust or family members as the remainder beneficiaries. Our article on how to avoid probate in South Florida compares more of these options.

HOW WE CAN HELP

A Lady Bird deed must contain the right reserved-powers language, an accurate legal description and proper homestead handling to work as intended. Small drafting mistakes can create problems your family will not discover until after you are gone. Our Florida estate planning attorney can review your situation, explain whether a Lady Bird deed, a trust or a combination makes the most sense, and prepare and record the deed correctly.

Call Florida Planning & Probate today at 954-557-7368 or contact us online to schedule your initial free consultation.

This article provides general information about Florida law and is not legal advice. Reading it does not create an attorney-client relationship. Please speak with an attorney about your specific situation.