How to keep your home out of probate: The Lady Bird Deed
How to keep your home out of probate: The Lady Bird Deed
A Lady Bird Deed (also called an Enhanced Life Estate Deed or transfer on death deed) is a lesser-known tool that we can utilize in your Florida estate plan. Florida is one of only five states with this type of deed in the country!
Lady Bird Deeds provide a unique way to transfer property to someone else upon your death while still retaining your current interest in the property. Essentially, you are saying “I am transferring this title to someone else, BUT I reserve certain powers and rights as to my property.” Additionally, you won’t need to ask for your remainderman’s permission to do anything relating to your property, unlike with other types of deeds.
Benefits:
- Automatically passes upon your death to your beneficiary
- Helps avoid probate for the property (saving time and money)
- Allows you to retain homestead rights
- Can help you avoid federal gift tax
- Allows you to retain the right to sell or mortgage the property, revoke the deed, etc. during your lifetime
- Can be effectively used as a Medicaid planning tool
- Preserves a step-up in bases to help eliminate capital gain tax
Disadvantages:
- You are limited on how to name your beneficiaries. For example, you can’t name an alternative beneficiary in the event your named beneficiary predeceases you.
- A Lady Bird Deed may not be the best planning tool if you wish to leave the property to more than one person, especially if they are likely to disagree about how to handle the property upon your death.
- There may be a better estate planning tool best suited for your individual needs and goals, such as a revocable trust.
Lady Bird Deeds and Other Planning Tools:
- Unlike a quit claim deed or warranty deed, a Lady Bird Deed does not transfer full ownership of property to the grantee upon signing. Instead, it’s an incomplete gift that is not completed until your death.
- If you have a Will and a Lady Bird Deed, the deed will control unless the deed was revoked prior to death.
- A revocable trust can accomplish the same goals as a Lady Bird Deed, but with much for flexibility and instructions as to how the property is to be handled.
Call us today to schedule a consultation with one of our estate planning attorneys to discuss whether a Lady Bird Deed is an ideal planning tool for you.
-Heather