Tag Archives: lady bird deed

These deeds are also call “enhanced life estate” deeds.  With a standard life estate deed, you could name a beneficiary to inherit your property while you keep ownership of it for your lifetime, but with significant restrictions.  You wouldn’t have the right to sell or mortgage the property and you might also be liable to the beneficiary you named if you greatly decreased the value of the property – for example, let a house fall into serious disrepair.

By contrast, an enhanced life estate deed (the Lady Bird deed) lets you:

  • Avoid probate of the property
  • Keep the right to use and profit from the property for your lifetime
  • Keep the right to sell the property at any time
  • Avoid making a gift that might be subject to tax
  • Avoid jeopardizing your eligibility for Medicaid

If you have a mortgage on your property, it is advisable to seek the lender’s approval before signing a Lady Bird Deed.  Some mortgage loans have provisions that enable a lender to call a loan due when you execute certain kinds of deeds.

Call the Law Offices of Debra G. Simms at 386.256.4882 to learn more.

This blog post is not case-specific and is provided only for educational purposes and is not intended to provide specific legal advice. Blog topics may or may not be updated and entries may be out-of-date at the time you view them.

 

 Probate is the name of the court process for passing ownership of a deceased person’s property to his or her beneficiaries.

For real estate, there are two types of probate administration under Florida law: formal administration and summary administration. Even if you have a Will, your property must pass through probate before your beneficiaries can obtain legal title to your property.

Summary Administration is available if the value of your property subject to probate in Florida is not more than $75,000, and if you have no creditors.  Summary administration is also available if the date of death is more than two years prior to opening the estate.  Summary Administration is usually less expensive and less time consuming than a formal probate.

If the total value of your estate is more than $75,000 or if there are actual or potential claims against your estate, then your heirs or beneficiaries will have to open a formal probate. This process is more expensive and usually much more time consuming than a summary probate.

In either event, your heirs or beneficiaries will need to hire a lawyer, pay court and other costs, file a publication notice, and wait until the Judge signs the required Orders before they can own or sell your land.

Even the simplest of probate estates must be open for at least the three-month creditor claim period; it is reasonable to expect that a simple probate estate will take at least five or six months to properly handle.

There are a number of ways to avoid this costly and lengthy procedure.

If you have a Revocable Living Trust, you can transfer your real estate to your Trust.  If you do not already have a Trust, it is a good idea to consult with an attorney to determine whether this solution is right for you.  Once you have a Trust, a deed must be prepared and recorded, transferring the real estate to your Trust.

Another option to avoid Real Estate is to consult an attorney about a “Lady Bird Deed”.  This is a type of deed used in Florida to transfer real estate to your intended beneficiaries automatically upon your death without the need for a probate.

If you own your real estate jointly with another individual, with rights of survivorship, or as Husband and Wife, then upon your death, the other individual will automatically own the property and no probate will be required until the second individual passes away.  You can still have a Lady Bird Deed if you own the property with another individual as long as you both agree on who will receive the property when you both pass away.

If you own the real estate with another individual, but the deed does not say “husband and wife” or “joint tenants with rights of survivorship” then your share of the property must pass through probate before your heirs or beneficiaries can receive it.

Questions? The Law Office of Debra Simms is here to help. Call us today 386.256.4882

 

This blog post is not case-specific and is provided only for educational purposes and is not intended to provide specific legal advice. Blog topics may or may not be updated and entries may be out-of-date at the time you view them.

 

 

 

LADY BIRD DEEDS

Many of my clients do not have Revocable Living Trusts.  Therefore, upon their death, any real estate they own will have to go through probate (unless it is owned jointly with a spouse or partner).

An option is an Enhanced Life Estate Deed/Lady Bird Deed as part of the estate plan. But, clients must be aware of the advantages and disadvantages of using this type of deed.

When you own property, you may execute a deed retaining the right to the property during your lifetime, with the right for someone else to receive the property after you die. The right to have the property during your lifetime is called a life estate. The right to receive the property after you die is referred to as a remainder interest.

For many years, in order to avoid probate, parents would have deeds prepared retaining a life estate in themselves, granting a vested remainder to their children. This worked well in avoiding probate, as well as preventing reassessment of their property for real estate tax purposes. It also preserved a step-up in tax basis at the death of the parent, since the property wasn’t considered transferred until death.

The disadvantages of this type of deed are that you could not easily undo the transaction. If the parent wanted to mortgage or sell the property, the parent would need the child to sign the mortgage or the deed. If the parent changed his or her mind and wanted to add or remove a child, the consent that child would be required. Even worse, if the child had financial issues and a judgment was recorded against him or her, that judgment could be a lien on the parent’s property. In addition, if any of the children died, his or her share could require probate.

Also, if the parent needed to apply for public benefits such as Medicaid to help cover the cost of Long-term Care, the transfer would be considered to be a transfer of assets which would create a penalty period hampering the parent’s ability to qualify for Medicaid.

The Enhanced Life Estate Deed/Lady Bird Deed adds language in the deed which basically says that the parent has the right to revoke the deed and sell the property to another person without the consent of the child. And, fortunately, this type of deed does not trigger a penalty period for Medicaid.  This type of deed transfer still avoids probate.

However, the law is presently unclear about other issues.

For one, if a parent wants to sell or mortgage the property, some title companies or lenders require the children to sign the deed or mortgage. Any judgment against the child is still, in some cases considered a lien on the parent’s property. This is a very controversial issue and is typically decided on a case by case basis by the title company or lender. Moreover, if the parent changes his or her mind and wants to add or remove a child, the consent of the existing children is still required by many title companies. Finally, if one of the children dies, his or her share may still need to be probated.

While the advantages mostly outweigh the disadvantages, it is important to understand the pros and cons of using an Enhanced Life Estate Deed/Lady Bird Deed.

We, at the Law Office of Debra G. Simms, are glad to assist you in determining if this is the right plan for you. Call us today at (386) 256-4882.

Contact Us

Port Orange Office:
Prestige Executive Center
823 Dunlawton Ave. Unit C
Port Orange, FL 32129
Local: 386.256.4882
Toll Free: 877.447.4667
New Smyrna Beach Office:
629 N. Dixie HWY
New Smyrna Beach, FL 32168
Local: 386.256.4882
Toll Free: 877.447.4667