Florida residents have different options to hold the title of real property for estate planning and tax purposes. If one’s main purpose is avoiding probate, it is possible to transfer the title of a property to a living trust, a limited liability company (LLC), or use a lady bird deed.
What is a lady bird deed? How can it help Florida property owners upon death? Keep reading to find out.
Lady Bird Deeds – An Introduction
Also referred to as “lady bird deeds,” enhanced life estate deeds are recognized in Florida, Michigan, Texas, Vermont, and West Virginia. Similar to other deeds, enhanced life estate deeds permit one party (the grantor) to convey or transfer the title of a property to another (the grantee).
Conversely, lady bird deeds permit property owners to transfer the title of property upon death while avoiding probate. Depending on the size and complexity of a deceased person’s estate, probate may result in a lengthy and costly process.
Explaining Florida Lady Bird Deeds – How Does It Work?
The structure and language used in a lady bird deed are similar to a standard warranty deed or quitclaim deed. Most of the terms remain the same, including the property’s legal description, the names of the parties involved in the transfer, and their designation as grantor or grantee.
The difference is the inclusion of language expressly stating that the subject property is conveyed to one or more grantees as remainder beneficiaries upon the grantor’s death.
During the grantor’s lifetime, he or she remains in full control of the property, retaining the right to sell, use, mortgage, or administer the property without the consent of the “remaindermen.”
Once the grantor passes away, the remainder beneficiaries must record the decedent’s death certificate in the county where the property is located to inherit the asset outside of probate.
Are Lady Bird Deeds Safe? – An Honest Overview
Lady bird deeds offer several benefits. The first advantage is probate avoidance, permitting the remaindermen to receive their fair share of a property without going through a demanding court-supervised administration.
The term “enhanced life estate” refers to the fact that a lady bird deed offers grantors superior control over their property. Unlike a standard life estate deed, the grantor can do anything with the property without the consent of the remaindermen.
Lady bird deeds offer superior flexibility, which is fundamental if the circumstances change, or an unexpected event impacts one’s estate plan strategy. The grantor can live within the property, convert it into a source of passive income, sell it, or gift it without being subject to the federal gift tax.
Throughout his or her lifetime, the grantor retains full control of the property. Please note that errors, omissions, or vague language may jeopardize the purpose of a lady bird deed. If a deed is deemed invalid in court, it may result in a stressful and costly experience.
Work with an experienced attorney to draft an enforceable lady bird deed and ensure full legal compliance throughout the process.