Lady Bird Deed in Florida

Summary

• A lady bird deed automatically transfers property upon death.
• With a lady bird deed, you still control the property during your lifetime.
• A lady bird deed allows you to avoid probate.

What Is a Lady Bird Deed?

A Florida lady bird deed allows you to automatically transfer your property upon death without probate. It also lets you use and control the property during your lifetime.

Requirements for Lady Bird Deeds

Here’s what you must include to create a lady bird deed:

1. The name of the grantor.
2. A reservation of an enhanced life estate.
3. The name of the remainder beneficiary.
4. The formal legal description.
5. A reservation of the homestead exemption if applicable.
6. Signature of the grantor, two witnesses, and a notary

After formally signing and delivering the deed, you bring it to your county records office to record it.

After you record the lady bird deed, the property will automatically transfer to the beneficiaries without going through probate.

Enhanced Life Estate Deed

An enhanced life estate deed is another name for a lady bird deed. The lady bird deed is a version of a life estate deed with enhanced powers reserved for the original owner of the property.

The enhanced life estate is the key feature of a lady bird deed. With an enhanced life estate deed, the life tenant (grantor) retains full power and authority to sell, convey, mortgage, lease, or otherwise manage and dispose of the property.

The owner of the enhanced life estate can freely sell or mortgage the property without the permission of the remainder beneficiary.

Advantages of a Lady Bird Deed

A Florida lady bird deed allows you to avoid probate.

The other major benefits are that it gives you full control over the property during your lifetime, it gives the beneficiaries a step-up in basis, and it allows you to change your mind about who should inherit the property.

It also allows you to keep your homestead exemption

Disadvantages of a Lady Bird Deed

A Florida lady bird deed does not provide any asset protection benefits.

It can’t be used to disinherit a spouse or minor child. It also will be unclear who inherits the property if the beneficiary dies before the grantor.

Lady Bird Deed vs. Life Estate Deed

The key benefit for using a lady bird deed instead of a traditional life estate deed is keeping full control over the property during your lifetime. While a traditional life estate deed lets you live in the property during your lifetime, you can’t change your mind without the beneficiary’s consent.

Lady Bird Deed vs. Quitclaim Deed

Unlike a lady bird deed, a quitclaim deed transfers property ownership when the deed is signed and delivered. A lady bird deed only transfers legal title upon death of the owner.

A Lady Bird Deed Avoids Probate

A Florida lady bird deed avoids probate once it is signed and recorded. After your death, the beneficiaries must record the death certificate. The county will then update the property records to the names of the beneficiaries.

What’s Better: Living Trust or Lady Bird Deed?

A lady bird deed is a good alternative to a living trust when the only property to be transferred is a homestead. A living trust is the better choice for people who have significant assets other than their house.

What Takes Precedence: a Will or a Lady Bird Deed?

In Florida, a lady bird deed takes precedence over a will when it comes to the specific property outlined in the deed. This type of deed allows property to pass directly to the beneficiary named in the deed upon the death of the property owner, bypassing the probate process entirely.

Therefore, even if the will states a different intent for the property, the lady bird deed’s terms override the will’s provisions for that asset

Using a Florida Lady Bird Deed for Medicaid Planning

A lady bird deed allows you to avoid probate while still being eligible for Medicaid assistance. Medicaid can only assert claims against assets in a person’s probate estate. Medicaid cannot go after a home that is transferred by a lady bird deed because the home is not part of the owner’s probate estate.

Using a Lady Bird Deed If There’s a Judgment

Judgment Against Current Owner

A lady bird deed does not protect an owner’s real property from creditors, other than a homestead, if there is a recorded civil judgment against the owner. A judgment becomes an automatic lien on all real property owned by the judgment debtor in any county in which the judgment is recorded, with the exception of homestead property.

Judgment Against Beneficiary

A civil judgment against a named remainderman of a lady bird deed does not affect the owner’s interest in the property during the owner’s lifetime. The beneficiary’s interest in the property does not vest until the owner’s death. There is no legal interest to which the judgment can attach as long as the owner lives.

Tax Liens

An IRS lien against a remainderman attaches to the property once the remainderman is named on the lady bird deed.

How Lady Bird Deeds Affect Title Insurance

A lady bird deed should not impact your ability to get title insurance.

Title companies should not require the signature or consent of the people listed as remaindermen when the enhanced life estate owner sells the property because the beneficiaries have no vested property interest.

Some title insurance companies may not understand a lady bird deed, and these companies may require the beneficiary to sign a release. Even worse, the companies may require any judgment holders against the remaindermen to release any claim of lien against the properties.

These requirements stem from a lack of understanding about how lady bird deeds work.

Lady Bird Deed FAQs

Below are answers to some common questions about lady bird deeds in Florida.