What Is the Florida Lady Bird Deed? The Florida probate process can be challenging, but it is essential to settling and administering local estates. Probate does not always have to cause headaches, however, and in many cases, top complications can be avoided while still ensuring that assets end up with the intended recipients.
While many Florida residents establish revocable trusts in hopes of avoiding probate, this is by no means the only option available. Another alternative worth looking into? Florida’s lady bird deed. While only available in a few select states, this can be a desirable setup in Florida.
Also known as the enhanced life estate deed, the lady bird deed provides a unique strategy for helping property seamlessly pass to designated recipients while also keeping probate complications to a minimum.
The lady bird deed can be beneficial for many Florida residents and their loved ones, as we will explain in more detail below. Keep reading to learn what the lady bird deed involves, when it’s used, and when other strategies are preferable.
What Is the Lady Bird Deed?
The primary purpose of the lady bird deed is to ensure that property is automatically passed on to the desired recipient. This represents a significant step up from the basic life estate deed, in which the owner or tenant enjoys the right to occupy or possess property for the duration of his or her life.
As an enhanced version of the life estate deed, the lady bird deed allows for lifetime use of the property in question but also involves the designation of a beneficiary, who can inherit the property in the event of the owner’s death. That being said, the owner of the estate retains full control, including the ability to revoke the deed or sell the property if desired.
While ‘lady bird’ may seem like an unusual name for this deed, its origins are interesting. This term was coined by a Florida attorney, who referenced this arrangement in a book on estate planning. Specifically, he used President Lyndon B. Johnson and his wife Lady Bird Johnson as an example of how this unique type of deed can be utilized. Since then, the Lady Bird moniker has become increasingly common.
How Is the Lady Bird Deed Created?
The process for establishing a lady bird deed is relatively straightforward, although it is always worth seeking insight from a trusted legal representative. In general, this deed should include a few key elements:
- A detailed description of the property in question
- The name of the grantor and any beneficiaries.
- Homestead provisions for those who intend to maintain the homestead exemption.
- A notarized signature.
Once these essentials have been added, the deed can be recorded with the local clerk of court. From there, no further action will be needed unless the grantor eventually chooses to revoke the deed.
What Are the Benefits of the Lady Bird Deed?
For most grantors, the main purpose of the lady bird deed is to deal with property outside of probate. This, in turn, can produce significant cost savings while also streamlining an otherwise time-consuming, painstaking process.
Add a maintained homestead exemption (as we will describe in more detail below) to the mix, and the already noteworthy financial benefits of the lady bird deed become even more compelling.
Because the lady bird deed is revocable, it is possible to transfer the property as desired — without the consent of the intended beneficiary. This means that the property can be deeded back to the original owner. This flexibility provides much-needed peace of mind for the grantor: the knowledge that the lady bird deed can help beneficiaries avoid probate but also, that the deed is not set in stone.
Are There Any Downsides to the Lady Bird Deed?
A variety of Florida residents can benefit from the lady bird deed, but there are a few situations in which this setup may be less than ideal. For some, the sheer novelty of the deed may stand in the way: this is, simply put, not as familiar to most Florida residents. This can be problematic when working with certain title or mortgage companies.
In some cases, a revocable living trust may be preferable. This makes it possible to transfer ownership to a trustee. Revocable trusts provides many of the advantages associated with the lady bird deed but tend to be more flexible.
Finally, lady bird deeds can be problematic when multiple beneficiaries are desired. This transfer works wonderfully for helping pass property to a single beneficiary — but as more people get involved, there are more opportunities for disagreement or even for going to court.
Because no one setup works equally well for all types of Florida tenants or owners, it is important to examine multiple strategies and weigh the pros and cons. With a little research, it may become evident that the lady bird deed is worthwhile in spite of its modest downsides.
How Does the Lady Bird Deed Impact Homestead Exemptions?
Florida residents who own property and make this their permanent residence enjoy access to a homestead exemption, which can dramatically decrease the property’s taxable value. Some people worry about creating a lady bird deed, however, because they fear that this will affect their eligibility for Florida’s homestead exemption.
Thankfully, this should not be a concern when the lady bird deed is used. As long as the deed makes it clear that the property will continue to function as the tenant’s homestead, the financial benefits of the homestead exemption should remain well within reach.
Make the Most of Florida’s Lady Bird Deed
The lady bird deed may not be right for everyone, but it remains a worthwhile option for those who crave both flexibility and peace of mind. When in doubt, take a close look at this strategy and consider whether it could be a viable solution for avoiding the biggest problems of probate.
Legal guidance can make a world of difference, revealing whether the lady bird deed is the preferred strategy — or whether a revocable trust might be the best option. Thankfully, there are many ways to handle estate planning in Florida or to limit the problems associated with probate.