In Florida, the Ladybird Deed, also known as an Enhanced Life Estate Deed, is a type of deed that allows property owners to retain control over their property during thier lifetime, while designating a beneficiary to inherit the property. Most interestingly, it can act as a substitute for an irrevocable trust, in that it offers Medicaid planning benefits. Here are the key features and benefits of a Lady Bird Deed:
Retained Control: The grantor (the person creating the deed) retains full control over the property during their lifetime. They can sell, mortgage, or otherwise manage the property without the consent of the beneficiary.
Avoidance of Probate: Upon the grantor's death, the property automatically transfers to the designated beneficiary without going through probate. This can save time and money and provide a smoother transition of ownership.
Medicaid Planning: In Florida, a Lady Bird Deed can be used as a Medicaid planning tool. The interest vests in the beneficiary upon the recording of the deed. The transfer of the property upon the grantor's death is not considered a transfer that would affect Medicaid eligibility. Additionally, because the property does not go through probate, it is not subject to Medicaid estate recovery.
Tax Benefits: The beneficiary receives a stepped-up basis in the property, which can reduce capital gains taxes if they decide to sell the property after the grantor's death.
Flexibility: The grantor can change their mind and revoke the deed or change the beneficiary at any time during their lifetime without needing the beneficiary's consent.
Simplicity: Creating a Lady Bird Deed is relatively straightforward and usually less expensive than setting up an irrevocable trust for the same purpose.
How It Works
Creation: The grantor signs a deed that transfers a life estate in the property to themselves with the right to sell, mortgage, or otherwise dispose of the property during their lifetime. The deed also designates a beneficiary to receive the property upon the grantor's death.
Recording: The deed is recorded with the county to be legally effective.
Death of Grantor: Upon the death of the grantor, the property automatically transfers to the beneficiary without the need for probate.
Considerations
Not Universally Recognized: While Lady Bird Deeds are recognized in Florida and a few other states, they are not universally recognized. It's important to consult with me to ensure this type of deed is suitable for your situation.
Potential Impact on Title Insurance: Some title insurance companies may have specific requirements or restrictions regarding Lady Bird Deeds.
Lady Bird Deeds can be an effective and efficient estate planning tool in Florida, offering numerous benefits such as probate avoidance, retained control, and potential Medicaid planning advantages. As with any legal instrument, you should not try to do it on your own! You need an estate planning attorney to ensure it aligns with your overall estate planning goals and complies with state laws. I can help you with your estate planning needs. Contact me when you're ready.
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