An Elder Law Attorney’s Explanation of The Lady Bird Deed and It’s Unique Advantages. By Amber M. Zeuner, Associate Attorney.
Why Do You Want To Avoid Probate?
Let’s first start with the of main goal, avoiding probate and why it’s important. For many, the word ‘probate’ evokes an image of cumbersome legal processes, protracted timelines, and unwanted expenses. While the probate system serves a necessary role in the legal resolution of an estate, circumventing it can offer several compelling benefits.
- Efficiency & Speed: Probate can be a lengthy procedure. Bypassing it can often allow assets to be distributed to beneficiaries much quicker, enabling them to access funds or properties without unnecessary delay.
- Cost Savings: Probate proceedings can be expensive, with costs encompassing court fees, attorney fees, and other administrative charges. By sidestepping this process, an estate can preserve more of its assets for the intended beneficiaries.
- Privacy: Probate is a public procedure. When an estate goes through probate, the decedent’s assets, debts, and the names of beneficiaries become part of the public record. Avoiding probate ensures this sensitive information remains private.
- Emotional Comfort: The probate process can be emotionally taxing for grieving families, involving a formalized and sometimes contentious legal journey. Simplifying or eluding this procedure allows families to focus on healing and remembering their loved ones without added distress.
We understand that end-of-life planning is a deeply personal endeavor. For many, avoiding probate can provide peace of mind, ensuring that their legacy is passed on seamlessly and with respect to their wishes. Now, let’s start talking about the “how to” of avoiding probate.
Lady Bird Deed-A.K.A. Enhanced Life Estate Deed
The Enhanced Life Estate deed, also commonly termed the “Lady Bird Deed,” is a powerful estate planning tool at our disposal in Florida. This tool is only available in four states aside from Florida including Michigan, Texas, Vermont, and West Virginia, and for several reasons eclipses the more commonly known life estate deed due to its unique advantages.
To fully appreciate the advantages of an Enhanced Life Estate deed, it’s important to first consider its alternative – the life estate. With a standard life estate deed, designated beneficiaries have a remainderman interest in the conveyed property and receive the property upon the death of the original owner. They become the life estate holder after the life estate deed is signed. This allows for a transfer of the property avoiding the need for probate. However, this type of deed can cause concern for the original owner who now must maintain the property for the benefit of the beneficiaries, limiting his or her use of the property in their lifetime. This may complicate the homeowner’s future planning should the homeowner wish to sell, transfer, or encumber the property as the remainder beneficiaries would have to sign any new deed or encumbrances from the named remainder beneficiaries due to their interest in the property.
But with the Enhanced Life Estate deed, you get the best of both worlds. Similar to the life estate deed, the Enhanced Life Estate deed is a legal instrument that allows for the seamless transfer of real estate from the owner to their beneficiaries upon the owner’s death. This transfer also avoids the need to probate the property. However, what sets the Enhanced Life Estate deed apart from the standard life estate is its ability to accomplish this goal while retaining all ownership rights in the homeowner. This means the homeowner can transfer, sell, convey, and even mortgage or reverse-mortgage the property as they would have been able to before executing the deed. Only upon the homeowner’s death do their beneficiaries obtain an interest in the property, making the Enhanced Life Estate Deed far superior to the standard life estate deed.
Juan C. Antúnez touches on the unique abilities of the Enhanced Life Estate deed in helping solve the issue of heirs’ property in his July 9, 2023 article titled, “What’s “heirs property” and why does it matter?” This is truly a prime example of how simple estate planning and the use of this tool can assist families in Florida in passing down their largest investment to their family – their home, while being cost-effective.
Another distinguishing facet of the Enhanced Life Estate deed is its invaluable use in the Medicaid planning practice. The execution of an Enhanced Life Estate deed is not counted as a disqualifying transfer for Medicaid qualification purposes. This allows an individual to become qualified for Medicaid to still pass their home or rental income-producing properties to their loved ones upon their death.
When considering an Enhanced Life Estate Deed, it is important to consider whether or not the property is mortgaged. Enhanced Life Estate Deeds are a special type of deed that financial institutions may not fully understand. If your property is mortgaged, it’s best to check with your mortgagor to ensure they will accept this type of deed to avoid any complications, then to confirm such agreement in writing.
A Few Pitfalls Of The Lady Bird Deed
There are also a couple of pitfalls to the Enhanced Life Estate Deed one should keep in mind. One pitfall is if the remainder beneficiary predeceases the owner, there is a two-step process that must be completed to maintain the benefits of the Enhanced Life Estate Deed. The first step is executing a special warranty deed putting the property back into the original owner’s name(s) to make the owner(s) whole again, followed by a new Enhanced Life Estate Deed naming the new remainder beneficiary. A second pitfall is the Enhanced Life Estate Deed is not for people whose beneficiaries are minor children because this may lead to issues regarding them inheriting as a minor and the possibility of a minor guardianship of the property being required.
Overall, property owners in Florida have access to a useful and affordable option called the Enhanced Life Estate Deed, or Lady Bird Deed, which ensures a quick and easy transition in transferring real estate to their beneficiaries upon death. If you’re interested in learning whether an Enhanced Life Estate Deed is right for you, our team of Elder Law attorneys can provide guidance in assessing whether an Enhanced Life Estate Deed is right for you and your family. We can assist you in preparing your properties for a seamless transfer to your beneficiaries in the future. Give us a call at 352.379.1900 or complete the form below to set up a consultation so we can guide you through the process and the ultimate goal of avoiding probate.