Depending on the complexity of an estate administration, probate can take months or even years to complete. Florida law allows you to rely on different estate planning tools to avoid probate and ensure a smooth inheritance process for your loved ones.
Is a lady bird deed better than a trust in Florida? Read on to find out.
Lady Bird Deed vs. Trust in Florida – Understanding the Concept
Lady Bird Deed
A lady bird deed is a legal document used to transfer property upon death outside of probate. During the owner’s lifetime, the property remains in his or her control, only transferring to the beneficiaries upon death.
A fully legal instrument in Florida, a lady bird deed has proper requirements for execution and recording. The individuals named as beneficiaries of the deed are referred to as “remainder beneficiaries.”
The ownership title of the property vests the remainder when the life tenant (the owner who executed the deed) dies. Please note that the life tenant has control of the property during his or her life, including the power to lease, mortgage, gift, or sell the asset without the remainder’s consent.
A property titled with a lady bird deed is not considered part of the life tenant’s estate, which permits the remainder to avoid probate.
Revocable and Irrevocable Trusts
A trust is a legal arrangement in which the trust maker (referred to as the “trustor” or “settlor”) transfers the title of assets to a trustee (fiduciary) for the benefit of specific individuals (beneficiaries).
Any property titled in the name of a trust is not considered part of the trustor’s estate upon death, which ensures trust assets are not subject to probate. There are two variants of trusts in Florida – revocable and irrevocable.
A revocable trust accepts modifications or amendments while the trustor is alive. An irrevocable trust cannot be modified or revoked after the document is executed and deemed valid. All trusts eventually become irrevocable when the trustor dies.
Is a Lady Bird Deed Better than a Trust in Florida? – The Verdict
The answer depends on your personal circumstances and purpose. A property titled with a lady bird deed can be problematic in the event of unexpected death.
If the remainder beneficiary dies before the life tenant, determining what happens to the property after the life tenant’s passing may result in an unclear situation. Lady bird deeds also require extra attention to detail and constant reviews.
A life tenant’s failure to designate the property to the right remaindermen due to a lack of paperwork updates after a change of plans can be catastrophic for the rightful beneficiaries.
Conversely, trusts are more flexible. If you work with an expert trust attorney in Florida, it is possible to set up tailored trusts to achieve specific goals. For example, you can create a trust instrument with instructions for conditional distribution or limited distribution.
Unlike deeds, a trust does not need to be recorded, as it is not part of the public records. If you want full privacy in your estate planning decisions, this option is better for your case.
Transferring property upon death through a trust is generally quicker. This way, the beneficiaries can use the assets to pay bills, administrative costs, and other expenses to deal with the rest of the decedent’s estate. In terms of costs, lady bird deeds are more affordable to maintain than trusts.