A lady bird deed, also known as an enhanced life estate deed, is a form of conveyance used in estate planning relating to the transfer of real property. A lady bird deed allows a property owner to transfer property to the person designated in the deed without the need for probate. It is essentially the equivalent of a pay on death account for a piece of real estate. Currently, lady bird deeds are only recognized in 5 states. Florida is one of the states in which lady bird deeds may be utilized.
To create a lady bird deed a property owner(s) will execute a deed (a quit claim deed) whereby they retain an enhanced life estate in the property meaning that they enjoy all of the benefits of ownership that a person with a fee simple form of ownership possesses. During the life of the life tenant, he or she can sell the property, mortgage the property and even keep the property as their primary homestead, thus retaining the benefits associated with homestead rights in Florida such as exemption from judgment creditors and the homestead tax exemptions. The deed will then designate individual(s) or another entity that will automatically be granted full ownership of the property upon the life tenant’s death. The beneficiaries can be given the property as tenants in common or joint tenants with rights of survivorship depending on how the client wishes to distribute the property to the heirs.
Upon death, the beneficiaries will not have to probate the estate inherit the property as the real property does not become an asset of the probate estate. This of course, will in most circumstances, save the heirs or beneficiaries time and money by avoiding the need to file a probate proceeding in Florida.
Depending on the circumstances, a lady bird deed can prove a useful tool in a client’s estate plan to either eliminate or minimize the probate estate and the cost and time customarily associated with a probate proceeding.
If you would like to consult with us regarding a lady bird deed or any other estate planning or probate issue, please call our offices today.