Lady Bird Deed Florida: What is it and How Does It Work?

Published June 17, 2024

In managing your properties, there will come a time when you would want your children, lover, or anyone you trust to inherit them when you pass away. One great way to do this is by executing a lady bird deed.

What Is a Florida Ladybird Deed?

A Florida Lady Bird Deed is designed to grant property owners in Florida the ability to transfer property to others automatically upon their passing while maintaining use, control, and ownership while alive.

With a ladybird deed, a person acquires an enhanced life-state interest in real property while transferring the remainder interest to someone else upon their death.

The person who holds the life estate sustains ongoing control over the property during their lifetime. This allows them to sell, use, or otherwise use the property as they choose without the involvement of the remaining beneficiaries.

The remaining beneficiaries have no rights to the subject property. Moreover, their consent is not required to sell the property while the holder is alive.

Assuming the deed remains well grounded. The life estate holder did not otherwise pass on the property when they were alive. The property automatically passes to the remainder of the beneficiaries upon the holder’s passing. It will commence without the property being administered through the probate court. It is the main benefit of having a ladybird deed.

Examples of Ladybird Deeds in Use

Typically, the original property owners use Florida ladybird deeds to grant themselves a life estate while acknowledging remaindermen to inherit such assets upon their death.

Here are the two most common scenarios often encountered:

• Married couples execute an enhanced life estate deed in which a joining life estate is reserved. Upon the surviving spouse’s passing, the property is vested in the named remaindermen.
• Older adults often execute enhanced life estate deeds in homestead properties, naming their children as remaindermen.

Benefits of Florida Ladybird Deeds

1. Probate avoidance

One of the primary advantages of an enhanced life estate deed is granting the property to bypass probate. The property can be passed on directly to the designated beneficiaries upon the grantor’s passing. It saves time and money for the beneficiaries to skip the potentially lengthy and costly probate proceedings.

2. Retaining control

The grantor maintains complete control over the real estate during their lifetime. They can use, sell, or mortgage the property as they please; the beneficiaries’ consent is irrelevant.

3. Preservation of homestead benefits

In Florida, a ladybird deed helps to retain homestead benefits. One benefit you can leverage is property tax exemptions. Also, protection from creditors.

4. Medicaid eligibility

This type of deed can also help preserve Medicaid eligibility. Since the property remains under the grantor’s control during their lifetime, it isn’t deemed a countable asset for Medicaid purposes.

5. Flexibility

The ladybird deed also provides vast flexibility, as the grantor isn’t irrevocably bound to the arrangement. They retain the right to change their minds about the property’s beneficiaries or disposition.

6. Simplicity and cost-effectiveness

Creating a Florida ladybird deed is generally more straightforward and less expensive. It is when compared to setting up a trust for the sole purpose of passing real estate.

7. Immediate transfer of ownership

Upon the grantor’s death, the property transfer to the beneficiary is immediate. This avoids delays associated with typical probate processes.

Disadvantages of Lady Bird Deed in Florida

1. In Florida, statute 732.401 prohibits an individual from devising homestead property to anyone else when a surviving spouse and minor children are present. Thus, the deed cannot create a remainder interest in the parties without the agreement and involvement of the life interest holder’s spouse and children.
2. Title insurers are often skeptical about insuring Lady Bird’s deeds in specific scenarios. For one, if a life estate is crafted to leave a remainder interest to only one or some of the life estate holder’s children. Certain title companies will not insure the transfer. The omitted children may arise because of the possibility of future title disputes.
3. Ladybird deeds may do some harm when there are multiple remaindermen. Ideally, these deeds should only be employed when the remaindermen are relatives who will likely come to terms on how the property should be used or sold/transferred after the passing of the life estates holder.
4. These deeds may also result in tax consequences. Gift tax, estate tax, or specific documents must be considered before execution.