If you own real estate (including your home), the single smartest thing you can do to save money and protect your estate is to change the form of deed to a Lady Bird Deed.
As you may know, I am a lawyer (licensed in Florida, New York, and Connecticut), and I know something about real estate, estate planning, and how to maximize government healthcare benefits.
And, I know that for the vast majority of Floridians who own real estate, there is no single low-cost and intelligent thing that they can do other than retitling their property using a Lady Bird Deed.
What Is A Lady Bird Deed?
The words “Lady Bird Deed” refer to enhanced life estate deeds that have been legal in Florida since the mid-1980s.
Lady Bird Deeds allow for a grantor (the real estate owner) to maintain total control of their property during their lifetime and then when they die, leave it to their spouse and/or descendants without the need of a will, trust, or probate.
5 Advantages Of A Lady Bird Deed
There are five primary advantages of a Lady Bird Deed and several additional minor advantages.
1. 100% control of the property retained by the property owner. During the property owner’s lifetime, 100% control of the property is retained by such owner. The owner can do whatever they would have done with the property in their sole discretion without regard to the Lady Bird Deed. This includes changing what happens upon the death of such property owners. Further, Lady Bird Deeds do not change homestead or other tax attributes of the subject property.
2. Low cost and widespread acceptance. It costs no more to execute a Lady Bird Deed than a warranty deed. Further, it is inexpensive to change the current form of ownership from a warranty deed to a Lady Bird Deed.
3. Removes the subject property from high cost and time-consuming probate. When someone dies, real property is most often subject to a process known as probate. This is a court-supervised property transfer process that is both extremely costly and time-consuming. Probate is avoided using a Lady Bird Deed to title real estate, and legal fees (up to 5% of the real estate value) are not incurred. As a result, over the course of ownership of the real estate, switching the deed from to a Lady Bird Deed will actually save money (perhaps a lot of money).
4. Exempts real estate from counting as an asset when qualifying for government assistance with long-term healthcare costs. Property titled using a Lady Bird Deed does not count as an asset when determining qualification for government long-term healthcare assistance. Further, there is no “look back” period on a property transfer from a warranty deed to a Lady Bird Deed.
5. Avoids retroactive billing and liability for long-term healthcare costs incurred. To the extent that the government provides long-term healthcare benefits, the beneficiary’s estate may be retroactively held responsible for reimbursing the government for such benefits. However, property that is held through a Lady Bird Deed is exempt from such retroactive financial responsibility.
Lady Bird Deed vs Traditional Life Estate
There are several advantages of a Lady Bird Deed over a traditional life estate, including:
1. Lower cost to set up;
2. Flexibility to make changes to those that will inherit the property (this can be very important);
3. Total control over the subject property that does not exist with traditional life estates (this can be very important); and
4. Legal separation of the ultimate party who will inherit the property from the property until such inheritance actually happens (this can be very important).
Meaningful Disadvantages Of A Lady Bird Deed
Actually, I know of no disadvantages, but as a lawyer, I am trained to never say anything without reserving the right to be wrong (but still correct) in some circumstances.
Why Didn’t My Lawyer Tell Me About The Lady Bird Deed?
I can’t answer that question.
But, keep in mind, if everyone in Florida used a Lady Bird Deed whenever appropriate, probate fees paid to lawyers (a major profit center for many attornies) would disappear.
So What’s Next?
If you own real estate in Florida, call me (561-400-2490), and I will provide a free consultation to determine if a Lady Bird Deed makes sense for your family.