What is a Lady Bird Deed in Florida?
A Florida lady bird deed is a special kind of property deed that allows a real property owner to retain use and control over a property during their life and then transfer the property to designated heirs upon the owner’s death without having to deal with probate. A lady bird deed includes features of a deed with a retained life estate and of a deed with transfer on death provisions.
A lady bird deed therefore has two roles:
- A grantor—the current owner of the property and the person who will live in and control the property during their lifetime.
- A grantee—the person who will inherit the property upon the grantor’s death. This person is called the remainderman.
Florida Life Estate Deed
Normally, property is owned as fee simple, which means the entire ownership and control of the property is in the name of the current property owner.
When someone transfers ownership by a typical deed with a retained life estate, the fee simple interest splits into two: (1) the life estate and (2) the remainder. The transferor retains the life estate in the property. The transferee receives the remainder interest in the property, or in other words, all ownership other than the retained life estate.
With a regular life estate deed, the owner of the life estate owns the property during his life. The owner of the remainder (a remainderman) owns the property upon the death of the life estate holder.
Without lady bird deed provisions, if the life estate holder wants to sell the property, then both the life estate holder and the remainderman have to agree to the sale. In other words, the grantor of the deed retains the right to live in the property during their lifetime, but he cannot not sell or transfer the real estate during his life without the remainderman’s consent.
All lady bird deeds create a life estate, but not all life estate deeds are also lady bird deeds.
Florida Transfer on Death Deed
The second type of deed embedded into a lady bird deed is a transfer on death deed, or TOD deed. A transfer on death deed provides that the property title automatically and immediately transfers to a designated person upon the owner’s death.
A transfer on death deed is often used as a will substitute as it allows people to efficiently transfer their homes to their designated heir outside of the cumbersome and expensive probate process.
Transfer on death deeds are not available in every state. In particular, Florida law does not provide for transfer on death deeds. Florida has not adopted the Uniform Real Property Transfer on Death Act, which would otherwise allow people to use a transfer on death deed for their property.
However, a lady bird deed can accomplish the same thing as a TOD deed. A Florida lady bird deed allows the owner to transfer a house on death via deed.
Enhanced Life Estate Deed in Florida
A lady bird deed, also called an enhanced life estate deed in Florida, is a legal way to split property ownership into an enhanced life estate and a remainder interest.
The enhanced life estate is the key and distinguishing feature of lady bird deed. Only states that allow an enhanced life estate, therefore, can have a lady bird deed. For that reason, a lady bird deed is often called an enhanced life estate deed.
What’s the difference between a regular life estate and an enhanced life estate?
With a regular life estate deed, the life estate holder must get the remainderman’s consent to sell, transfer, or mortgage the property during his lifetime.
But with an enhanced life estate deed, the life estate holder may sell, transfer, or mortgage the property without the consent or cooperation of the remainderman. In other words, the enhanced life estate holder has full and complete control over the property during their life. The owner transfers the property, retains an enhanced life estate, and does not relinquish any rights or control of the real property during his lifetime.
In practical terms, the lady bird deed enables a property owner to “deed” property to someone else, but retain full control during their life.
The maker of the lady bird deed later decides to to sell or otherwise transfer the property the remainderman will lose his remainder interest, and the remainderman will not be entitled to the property upon the owner’s death. But if the life estate holder keeps the property for the rest of his life the remainderman gets full control over the property immediately upon the death of the life estate holder.
A lady bird deed is revocable. In other words, the property owner can decide to deed the property back to himself or to transfer the property to a third party, which effectively cancels out the lady bird deed and divests the remainderman of their interest.
Example Use of a Lady Bird Deed
Sally Smith is retired and lives in her Florida, home by herself. She used to own her property together with her husband, but her husband is now deceased.
Mrs. Smith has two adult children. Other than an old car and some money in her bank account, she does not own anything else of substantial value. She wants to make sure that her house goes to her children when she dies in the easiest way possible. She doesn’t want her children to have to deal with probate or have to hire a lawyer just to get the home. But, she doesn’t want to give up her home while she’s living.
Mrs. Smith executes a lady bird deed for her house, naming her two children as beneficiaries. While Mrs. Smith is still living, Mrs. Smith will still enjoy full benefits of ownership and can freely live in, sell, mortgage, or transfer the home. Once she dies, however, the property will immediately transfer by operation of law to her two adult children. The children will not need to hire an attorney or probate the home.
Lady Bird Deed Form
Many online form-generator websites provide low cost lady bird deed forms in Florida. Using one of these websites is cheaper than having an attorney prepare the lady bird deed.
A form generator site may be a good choice if you do not have any questions about lady bird deeds and know exactly what you are looking for and how the deed should be prepared. In other cases, many people find that having an attorney prepare the deed is worth the extra costs for peace of mind and to have someone directly answer any legal questions about the deed or the recording process.
Lady Bird Deed vs. Quitclaim Deed
The difference between a lady bird deed and a quitclaim deed in Florida is that a lady bird deed allows the current property owner to retain an enhanced life estate in the property during his life, while a quit claim deed typically transfers all title and rights to the property to the grantee, or the person receiving the property.
In other words, a lady bird deed functions as a quit claim deed that only becomes effective after death under Florida law.
Probate is a legal process by which a court brings together all of a deceased person’s assets, determines if any creditors have claims against the deceased person or their assets, and then distributes whatever is left according to the person’s will. Florida law requires that an attorney be involved in formal probate. Probate is both expensive and time consuming for a family.
A lady bird deed avoids probate because the property title automatically transfers to the remainderman by “operation of law.” While a transfer-on-death deed is not allowed under Florida law, a lady bird deed provides the same effect as a transfer-on-death deed by transferring the remainder interest upon death outside the probate process.
A lady bird deed in Florida does not affect the homestead character of a residence. The Grantor retains homestead rights after executing a lady bird deed for as long as the grantor lives in the property.
This means two things: first, the home will remain exempt from creditor attachment, and second, it will generally qualify for a homestead tax exemption.
Disadvantages of a Lady Bird Deed in Florida
The several disadvantages to lady bird deeds in Florida include:
- Lack of Asset Protection. A creditor may be able to place a lien or levy on the remainder interest in the lady bird deed.
- Ineffectiveness Against Florida Constitutional Restrictions. A person cannot use a lady bird deed to disinherit a spouse or minor child.
- Unexpected Deaths: If the holder of the remainder interest dies before the life tenant dies, it may be legally unclear as to what happens to the property when the original life tenant later dies.
- Changes to the Estate Plan. It will require extra work for the original owner to change his plan should he later decide not to leave the property to the person designated as the remainderman.
Is a Lady Bird Deed Legal in Florida?
Florida is one of the few states where a lady bird deed is legal. The states that offer lady bird deeds include:
- West Virginia
Some other states may have what is called a transfer on death deed. Otherwise, property in those states must generally be put into a trust to avoid probate upon the owner’s death or else be held with survivorship rights.
Cost of a Lady Bird Deed in Florida
The cost of a lady bird deed in Florida is generally inexpensive and can be done for a flat fee with an attorney.
In the course of executing a lady bird deed an attorney should discuss the advantages and disadvantages of the deed and make sure that the lady bird deed is consistent with the overall estate plan. The attorney will advise whether other estate planning documents are appropriate such as a will, health care directive, pre-need guardian designation, and living will.
Does a Lady Bird Deed Have to Be Recorded?
Once the property owner executes the lady bird deed, the deed should be recorded in order to perfect and document the conveyance. Not recording the deed runs the risks that the deed might be lost.
Recording the lady bird deed should not carry significant documentary stamp taxes, even if the property is mortgaged.
Last updated on October 8, 2021