A Lady Bird deed (also called an enhanced life estate deed) lets a Florida property owner keep full control of their property during their lifetime while naming beneficiaries who will inherit the property automatically at death, without probate. The owner can sell, mortgage, or change beneficiaries at any time, with no need for the beneficiaries' consent. Lady Bird deeds are one of the most flexible estate planning tools available in Florida.
What Is a Lady Bird Deed?
A Lady Bird deed, also known as an enhanced life estate deed, is a legal tool used in estate planning. This type of deed allows property owners to retain control over their property during their lifetime while designating beneficiaries to inherit the property upon their death. Named after Lady Bird Johnson, the wife of former U.S. President Lyndon B. Johnson, this deed is particularly popular in Florida due to its flexibility and benefits.
Five Key Benefits of Lady Bird Deeds
Lady Bird deeds are beneficial for homeowners looking to avoid probate, protect their property from Medicaid recovery, and reduce tax complications. The benefits include:
Avoids probate: By avoiding probate, these deeds save time and legal costs because the property transfers directly to the beneficiaries.
Retains control: Unlike traditional life estate deeds, the grantor maintains complete control over the property during their lifetime. This means they can sell, mortgage, or change beneficiaries without anyone's consent.
Medicaid planning: Lady Bird deeds generally protect property from Medicaid estate recovery, which means the state cannot claim the property to recover Medicaid expenses after the grantor's death.
Tax benefits: The deed helps maintain homestead tax exemptions and can provide help with capital gains taxes after the grantor's death.
Creditor protection: Since the property is not part of the probate estate, the deed protects the property from creditors' claims after the grantor's death.
These deeds can also address other needs specific to the client.
Potential Limitations of a Lady Bird Deed
A Lady Bird deed may not be the right tool for every situation. Property owners should be aware of these considerations:
- Not all states recognize them. Lady Bird deeds are valid in Florida, but they are not universally accepted. If a property owner moves to a state that does not recognize enhanced life estate deeds, the deed's effect could be uncertain.
- Mortgage complications. Some mortgage agreements include a due-on-sale clause. While Lady Bird deeds do not typically trigger these clauses, the lender should be consulted before recording the deed.
- Does not replace a full estate plan. A Lady Bird deed covers real property only. Other assets, such as bank accounts, investments, and personal belongings, still need to be addressed through a will, trust, or other planning tools.
Setting Up a Lady Bird Deed with an Attorney
Setting up a Lady Bird deed involves several steps. Those interested can consult a lifetime care attorney familiar with Lady Bird deeds and Florida law. They will provide guidance and ensure the deed addresses the client and beneficiaries' specific situation.
Contact the firm today to see if a Lady Bird deed is right for you.
Frequently Asked Questions About Lady Bird Deeds in Florida
Can I sell my house if I have a Lady Bird deed?
Yes. The property owner retains full control during their lifetime, including the right to sell the property. If the property is sold, the Lady Bird deed is effectively void, and the beneficiaries have no claim to the proceeds.
Does a Lady Bird deed protect my home from Medicaid recovery?
In Florida, a Lady Bird deed generally prevents Medicaid from placing a claim on the property after the owner's death. Because the property passes directly to the named beneficiaries outside of probate, it typically falls outside the scope of Medicaid estate recovery.
What is the difference between a Lady Bird deed and a regular life estate deed?
A regular life estate deed transfers a future interest to beneficiaries immediately, meaning the owner cannot sell or mortgage the property without the beneficiaries' consent. A Lady Bird deed keeps full control with the owner, including the right to sell, mortgage, or revoke the deed entirely.
Do I need a lawyer to create a Lady Bird deed?
While a lawyer is not strictly required, having an attorney draft the deed helps confirm it is recorded correctly and complies with Florida law. Errors in the deed language or recording process can create title problems later.
Can a Lady Bird deed be revoked or changed?
Yes. The property owner can revoke or amend a Lady Bird deed at any time without the beneficiaries' permission. This flexibility is one of the key advantages over a traditional life estate deed.