Florida has a very cool way to devise property that you need to know about. In a ladybird deed, the grantor (property owner) deeds the property to the remaindermen (the people you leave the property to after your death) and the grantor retains a life estate. Even though the grantor only has a life estate, he/she may still mortgage or sell the property during his/her life without the remaindermen’s signature.
What does LadyBird Deed mean?
I know that “LadyBird deed” throws people off. It was inexplicably named after Ladybird Johnson by an attorney describing it in a legal article. However, if you want to be “in the know,” you call it this as opposed to its more official name, an Enhanced Life Estate Deed. The Florida Statute do not expressly authorize lady bird deeds. They seem to have come along due to a 1917 case.
Differences from Traditional Life Estate?
A ladybird deed has some beneficial differences from a traditional life estate. The following characteristics exist in a traditional life estate:
- The owner of the property generally deeds the property to a third party reserving the right to use the property during his or her lifetime.
- At the owner’s death, the life estate, and the right to possession, terminate, and full ownership vests in the reamindermen.
- If the owner ever wanted to get a mortgage, the remaindermen has a say.
- The life tenant may also be responsible to the remaindermen for any acts of the life tenant that devalue the remainder interest, such as failure to pay taxes.
Other benefits of a LadyBird Deed?
They eliminate probate if the property in question is the only probate asset. Also, the conveyance to the remaindermen is not considered a completed transfer for gift tax purposes. The remaindermen also receives a step-up basis in the property upon the death of the owner.
Suitable for Homestead Property?
Depends who you ask. This is a debate in the legal world but I think if the grantor understands the risks, he/she can make the best decision for themselves. Learn more about Florida property.
Can it fund a Revocable Trust?
Red flags using a LadyBird deed?
Other than the homestead debate, you must be aware that with a ladybird deed, liens against the remaindermen can attach to the property. In this case, the grantor should consider conveying to another third party. The homestead status would not protect the remainder interests.
This is surely not meant to be an exhaustive analysis of Lady Bird Deeds but rather some information so you are aware of it and know to ask an attorney for more details to see if it would assist in your own Estate Planning goals.
Disclaimer: The Law Office of Lori Vella’s website contains general information directed to Florida residents. This firm does not intend to give legal advice through its pages and/or blog. If you need legal advice, we encourage you to find an attorney licensed in your state. This language on this website website does not create an attorney-client relationship between you and this firm.