Florida Lady Bird Deed

What is a Lady Bird Deed?

Lady Bird deeds, also known as enhanced life estate deeds, are an important tool in estate planning. Named after Lady Bird Johnson, former First Lady of the United States, these deeds provide a unique way for homeowners in Florida to manage their property during their lifetimes and ensure a smooth transition of ownership upon their passing…avoiding the ever dreaded PROBATE PROCESS.

How Lady Bird Deeds Work?

At its core, a Lady Bird deed works much like a traditional life estate deed. The original property owner, also known as the life tenant, retains the right to use and live in the property for the duration of their life. However, the key difference lies in the enhanced powers that the life tenant retains.

In a Lady Bird deed, the life tenant can sell, mortgage, or otherwise dispose of the property without the consent of the remainderman—the person who is designated to receive the property after the life tenant’s death. This flexibility, recognized under Florida law, is not typically found in standard life estate deeds and is a defining characteristic of the Lady Bird deed.

Benefits of Lady Bird Deeds

The benefits of using a Lady Bird deed as part of your estate planning are numerous.

  • These deeds allow for the avoidance of probate, the often time-consuming and expensive legal process through which a deceased person’s estate is distributed. In Florida, property transferred via a Lady Bird deed automatically passes to the remainderman upon the life tenant’s death, bypassing probate.
  • A Lady Bird deed allows the life tenant to maintain complete control over the property during their lifetime. This includes the ability to sell, mortgage or paint the place purple without the need for the remainderman’s consent.
  • Lady Bird deeds can be a useful tool for Medicaid planning. Because the life tenant retains the right to sell the property, it is often not considered a countable asset of the named remainderman for Medicaid eligibility purposes under Florida law. 
  • Lady Bird Deeds help the beneficiary avoid paying capital gains or income tax. In a nut shell, the date the Lady Bird Deed that is executed and recorded does not divest any ownership rights in the listed remainderman(beneficiary), so the value of the property in the deed is not taken into consideration at the time of transfer. The “gift” is not considered completed or fully divested until the date of death of the last life tenant listed on the deed. Section 1014 of the IRS Code allows a step-up in basis at the time of the life tenants’ death. The benefit of a step-up in basis is that the beneficiaries can then turn around and sell the real property without incurring any federal income tax liability for a property that may have only been worth $100,000.00 when originally purchased, but is now worth $400,000.00 at time of death and transfer of ownership.  Instead, for tax purposes, the basis of the property will step-up to fair market value at time of death(transfer), thus not paying income tax on the $300,000 increase in value over time.

How do you Create a Lady Bird Deed?

Creating a Lady Bird deed in Florida involves several steps, including drafting the deed with the correct legal language, signing the deed before a notary public, and recording the deed with the appropriate county office.

Given the complexities involved, it’s highly recommended to consult with a knowledgeable attorney at Bryant Law. Our attorney’s can guide you through the process, ensuring that all legal requirements are met and that your interests are protected.

Contact Bryant Law for your Florida Lady Bird Deed

Lady Bird deeds, or enhanced life estate deeds, can provide significant benefits in the right circumstances. They allow property owners in Florida to retain control over their property during their lifetimes, avoid probate, and even aid in Medicaid planning. 

For these reasons, it’s crucial to seek professional advice when considering a Lady Bird deed. At Bryant Law, we are experienced in a wide range of estate planning techniques, including Lady Bird deeds and trusts, and are ready to assist you with your estate planning needs in Florida. Don’t hesitate to reach out to us for assistance.