A ladybird deed, also known as an enhanced life estate deed, is an important estate planning tool that can have several significant benefits. This blog will explore the benefits and possible drawbacks of utilizing a lady bird deed in your estate plan.
What Is a Lady Bird Deed?
A lady bird deed is a deed in which the owner of a piece of real estate reserves a life estate interest in their property while transferring the remainder interest to certain designated beneficiaries. A life estate is the ability to live on property for life. So what practically occurs is the remainder beneficiaries gain title to the property upon the death of the property owner, much how like a transfer of death designation transfers funds in a banking or investment account.
The Benefits of a Lady Bird Deed
With a lady bird deed, the life estate interest retained by a property owner is labeled “enhanced” due to the fact that the owner retains the right to mortgage, sell, or dispose of the property without permission of the remaindermen or any liability for waste. This is one of its primary advantages as the property owner does not give up any rights or control over the property in the transfer.
The property owner can even change the remainder beneficiaries without their permission. Another benefit is that the property owner still maintains complete control of the property. However, the land transfers to the remainder beneficiaries on the property owner’s death, without the need to go through the probate process.
The ability to avoid probate is one of the most significant advantages of a lady bird deed. The probate process can be lengthy and expensive, depending on the type of assets required to go through probate. Once a ladybird deed is in place, the transfer of an asset will not require probate.
Disadvantage of a Lady Bird Deed in Florida
While the ladybird deed certainly has advantages, there are some possible drawbacks to be considered before implementing the deed in your estate plan. Of course, the ladybird deed only applies to the property or properties that it affects. In other words, probate may still be necessary or even unavoidable due to other assets a decedent has at the time of their death.
Additionally, trusts—which also avoid probate—can provide more flexibility in estate planning to make contingent beneficiary designations. The advantages of a trust go beyond merely preventing real property from going through probate. Therefore, depending on your assets, a trust might be a better option.
Finally, if property is sold or mortgaged, title insurers or mortgage companies may still require the signature of the remaindermen in order to go through with the transaction. While this typically should not be necessary, some transactions will require it.
Consult an Estate Planning Attorney at Powell, Jackman, Stevens & Ricciardi, P.A. for Advice
Implementing a lady bird deed in your estate planning can be beneficial, depending on your circumstances. To determine whether the use of a lady bird deed, trust, or other estate planning instrument can benefit your needs, you should seek the advice of one of our experienced estate planning attorneys at Powell, Jackman, Stevens & Ricciardi, P.A.