Enhanced Life Estate Deeds A/K/A “Lady Bird” Deeds

Often a family’s most valuable asset is their home. Florida has a simple and cost- effective way to avoid probate and allow people to transfer their home at death through filing an enhanced life estate deed often called a “Lady Bird” deed. The Lady Bird deed gives flexibility to the current homeowners to sell or mortgage the property without having to get the consent of the remaindermen (the people to whom the house will be transferred upon death). The owner can even create a new deed naming a different remainderman. Because the owner retains all the rights of ownership, the homestead rights to the property remain and the value of the home, up to certain limitations, may be excluded for Medicaid eligibility purposes. When the owner dies, the property automatically transfers on death to the adult children (remainderman) listed on the deed. The adult children receive a step up in basis- which means that the value of the house the children receive is the fair market value at the time of death which is a huge tax savings if the children sell the house, and the house appreciated in value from the date of purchase until date of death. All the remainderman has to do is present a certified copy of the death certificate to the county recorder’s office where the property is located and pay a recording deed and new deed is issued.

Here's an example: Parents who are married to each other live in a house that is their homestead property. They want to have their two adult children to inherit their house after they both pass away. The parents execute a Lady Bird deed and list their two children as remainder people. The parents retain a life estate with all of their rights that are listed above. If the father passes away first, the mother continues to live in the home for her life and retains all the rights. Upon her death, the property will transfer to the two children as tenants in common each having a half interest in the property. The adult children will receive a step up in basis and their starting value of the house will be the date of death of the last parent. One child will need to bring the death certificate to the county recorder’s office and pay a fee and the deed will be transferred into the adult children’s name.

The costs of having an attorney prepare the Lady Bird Deed and the filing of the new deed is a significant savings over opening probate and paying the court filing fees to transfer ownership of the house.

Please contact Howard, Jennifer and Shirley to prepare a Lady Bird deed for you as part of your comprehensive estate plan. We look forward to assisting you and your family.