There are several ways to pass your real estate property to your heirs when you pass away, each with different benefits. One way is to establish an Enhanced Life Estate deed, commonly called a “Lady Bird” deed. Only five states, including Florida, allow this type of property transfer upon death. This makes it a popular way to leave your real estate property to your intended beneficiaries while avoiding probate in Florida. Below, we discuss what a Lady Bird deed is and whether it’s a suitable option for your estate.
What is a Lady Bird Deed?
A Lady Bird deed transfers your real estate property to another person when you pass away. This type of deed automatically transfers property ownership to your named beneficiaries without probate or establishing a trust. The property owner maintains all rights to the property during their lifetime, including choosing to sell or mortgage the property.
How Does a Lady Bird Deed Work?
When you sign an Enhanced Life Estate deed, you list your desired heirs as remainder beneficiaries on the deed. Once you pass away, property ownership automatically transfers to your listed beneficiaries. Enhanced Life Estate deeds must be signed by two witnesses and notarized to be valid.
What are the Advantages of a Lady Bird Deed?
A significant advantage of having a Lady Bird Deed is transferring your property ownership to another person after you pass away without the property going through probate. Another benefit is that you preserve full ownership rights to maintain, sell, mortgage, or rent the property as you desire without the approval of your intended beneficiaries. You can also change the listed beneficiaries or revoke the deed. Lady Bird deeds also have several tax and Medicaid planning benefits.
What are the Disadvantages of a Lady Bird Deed?
One disadvantage of a Lady Bird deed is that beneficiaries have less control over what happens to the property during the owner’s lifetime than other types of property ownership transfers. Lady Bird deeds are also vulnerable to creditor claims, although they don’t go through probate. Since this type of deed is only available in five states, securing financing and insurance may be challenging if the company is unfamiliar with how Lady Bird deeds work.
What’s the Difference Between a Living Trust and a Lady Bird Deed?
Lady Bird deeds are typically less expensive and easier to maintain than a living trust. They are also specifically designed to transfer property ownership while living trusts hold many types of assets. In some states, a living trust may be the only option to transfer property to a beneficiary while avoiding probate. In a state like Florida, however, a Lady Bird deed can be a practical way to give your property to a loved one after you pass away.
What’s the Difference Between a Life Estate Deed and a Lady Bird Deed?
Traditional Life Estate deeds offer less flexibility for property owners than Enhanced Life Estate deeds. With a conventional Life Estate deed, you must get permission from the beneficiaries before mortgaging, selling, or gifting the property. You also cannot modify or revoke a Life Estate deed.
Create a Lady Bird Deed as a Part of Your Comprehensive Estate Plan
Creating an Enhanced Life Estate deed is a complicated and nuanced process. Working with a Florida estate planning attorney like Thomas R. Peppler is essential to help you develop the best way to distribute your estate to your intended beneficiaries based on your unique assets and desires. Call our office today or schedule a consultation to speak with a member of our team and get started creating your estate plan today.
