“Lady Bird Deed – a helpful estate planning tool for owners of real property.”

“Lady Bird Deed – a helpful estate planning tool for owners of real property.”

What is a Lady Bird Deed?
A Lady Bird Deed is a type of deed that allows the owner of a property to transfer that property to a specified beneficiary upon their death without the need for that beneficiary undergo the probate administration process. The original property owner maintains complete control over the property until their death – including the right to change their minds and sell the property if they so choose. The technical term for a Lady Bird Deed is an “Enhanced Life Estate Deed”. These are also sometimes known as a “Transfer on Death Deed”. Lady Bird Deeds are only available in a limited number of states, including Florida.

How do Lady Bird Deeds work?
Lady Bird Deeds split the ownership of a property into two types of interests – a life estate and a remainder interest (i.e. ownership in the property after the life tenant dies). As a life tenant, the original owner of the property would maintain ownership and control of the property for their lifetime. Upon their death, the property would automatically transfer to the beneficiary or beneficiaries of their choosing (remaindermen). This effectively means that the property will never be a part of the original owner’s probate estate because upon their death, the property is no longer theirs. Therefore, the beneficiaries may own the property outright without waiting for the property to be transferred to them after the estate has been administered through probate – a process that can take years in many instances.

What are the benefits of Lady Bird Deeds?

1. Avoidance of Probate
Once the original owner of a property subject to a Lady Bird Deed dies, the property automatically transfers to the remaindermen without going through probate.

2. Maintained Control
In addition to maintaining complete control over the property up until death, the original owner of the property also maintains the ability to change their minds and sell the property if they chose to do so. Unlike with standard life estates, any changes the original owner decides to make – including mortgaging, selling, do not require the consent or approval of the remaindermen.

3. Medicaid Planning
When applying for Medicaid, an applicant may not have transferred any property within 5 years of submitting their application. Because the owner maintains control of the property throughout their lifetime, a Lady Bird Deed is not considered a transfer of assets for Medicaid purposes.

What is the downside to Lady Bird Deeds?

Homestead rules.
Florida Statutes provide a prohibition against disinheriting one’s spouse or minor children from the family homestead. If the property subject to a Lady Bird Deed is the owner’s primary residence and the owner has a spouse or minor child, then their rights may impact those of the chosen remaindermen upon the owner’s death.

How can I learn more?

Our staff here at the Elderly Care Law Firm are well versed in the laws surrounding Lady Bird Deeds and other matters of estate planning. Give us a call at (305) 836-4697 to schedule a consultation.

Contributed by Rosa Newman, JD

Elderly Care Law Firm