Florida Lady Bird Deed Form
Florida Lady Bird Deed Form: Summary
A Florida lady bird deed form allows property to be automatically transferred to a new owner when the current owner dies, without the need to go through probate. It also gives the current owner retained control over the property, including the right to change his or her mind about the transfer.
Special language is required to ensure that the deed qualifies as a lady bird deed. This language is automatically included by our deed preparation service and valid in all Florida counties.
What is a Florida lady bird deed?
A Florida lady bird deed form is a type of life estate deed that transfers Florida real estate to a new owner automatically when the current owner dies—with no need for probate. The owner may also change his or her mind about the lady bird deed.
A property owner uses a lady bird deed to arrange for the eventual property transfer without sacrificing control over the property during life. The current property owner—who becomes the life tenant—retains the right to sell, mortgage, or transfer the real estate.
What is a Florida enhanced life estate deed?
A Florida enhanced life estate deed is the same thing as a Florida lady bird deed. Lady bird deeds are formally called enhanced life estate deeds. The life estate included in the lady bird deed is enhanced by the broad powers that the owner reserves over the property.
How does a Florida ladybird deed form work?
A Florida ladybird deed form works by using specific language that transfers property at death without probate while also giving the owner broad rights over the property before death. This language includes several key features:
- Retained life estate. An owner who signs a lady bird deed retains (or keeps to himself or herself) a life estate in the Florida property. The retained interest allows the owner to possess and own the property for life.
- Remainder interest. A lady bird deed transfers a remainder—the right to take ownership of the property when the current owner dies—to one or more other persons (called remainder beneficiaries). A lady bird deed that names multiple beneficiaries can specify the co-ownership form they will use when they take title.
- Reserved powers. The current owner reserves the power to control the real estate. He or she can use, sell, mortgage, or otherwise deal with the property during life without involving the remainder beneficiaries. The owner can change his or her mind and do something different with the property if the owner is still living. The owner cannot revoke or amend a lady bird deed by will.
- No present rights in beneficiaries. Remainder beneficiaries named in a lady bird deed have only contingent future interests in the property while the current owner is still alive. The current owner’s power to sell or otherwise deal with the property does not require the remainder beneficiaries’ consent. (This is the difference between a life estate deed and a lady bird deed).
- Automatic transfer upon death. If the original owner still owns the property and the lady bird deed is still effective, the property passes automatically to the remainder beneficiaries when the original owner dies. The transfer occurs outside of probate.
This ability to avoid probate at death—together with the original owner’s broad control over the property during life—make ladybird deeds a popular estate planning tool in Florida.
What are the advantages of a Florida lady bird deed?
A Florida lady bird deeds have several unique benefits that make them excellent estate-planning tools for Florida property owners:
- Avoid Florida probate. Lady bird deeds avoid the need to administer or probate the real estate upon the owner’s death. The property passes automatically to the named beneficiaries outside of the probate process.
- Retained control. The original owner keeps full control over the property during his or her life—including the right to change his or her mind about the future transfer to the beneficiary. A survivorship deed, by comparison, gives a new joint owner an immediate ownership interest in the property.
- Medicaid asset protection. Florida lady bird deeds offer several Medicaid planning benefits. A transfer under a lady bird deed is not a countable transfer under current regulations that govern Medicaid-eligibility determinations. The property is also not part of the estate that can be recovered by the state after the owner’s death.
- Retained homestead exemption. A transfer under a lady bird deed is not legally effective until the owner’s death. Because of that, a recorded lady bird deed does not affect the current owner’s homestead exemption. The owner continues to benefit from the significant property tax and asset protection benefits associated with Florida homestead rules.
- Tax savings. Federal tax law treats the property as though the current owner owned it until death. The property therefore qualifies for a basis step-up when the owner dies. The stepped-up basis effectively erases the income tax liability for any increase in the property’s value during the original owner’s life. The result can be substantial income tax savings.
- Saving legal fees. A living trust can achieve some of the same benefits as Florida lady bird deeds, but forming a living trust can be relatively expensive. Lady bird deeds can be just as effective at less cost.
Attorney Practice Note: Florida charges a documentary stamp tax—the equivalent of a transfer tax—when deeds that transfer title to real estate are filed.1 Not all deeds require payment of transfer tax. Lady bird deeds usually escape taxation at the time of filing.
The Florida Department of Revenue does not change a full documentary stamp tax if the person who transfers the property is the same person that holds the life interest (the life tenant). Instead, lady bird deeds are assessed only minimum documentary stamp tax (usually $0.70) when they are filed. If the property is not sold before the life tenant’s death, it becomes subject to full documentary stamp taxes.
Do Florida lady bird deeds transfer a clear title?
Florida lady bird deeds are popular tools that transfer a clear title to real estate, with one exception. Some title insurance companies will not issue a policy covering a lady bird deed if the deed passes the property to an owner’s child but leaves out the owner’s other children (i.e., the beneficiary child’s siblings). This situation can lead to future title issues.
If the lady bird deed transfers property to an owner’s children it is best to include all children. Otherwise, a living trust should be considered.
How do Florida lady bird deed relate to Florida homestead law?
On the death of a married Florida property owner, Florida homestead law gives the owner’s surviving spouse a life estate in property that is used as a personal residence (homestead). The deceased owner’s children receive a vested remainder interest.2 These rules preempt the use of a lady bird deed to transfer property to anyone other than the surviving spouse or children. A property owner in this situation cannot use a lady bird deed to transfer the homestead unless the spouse and children join in the transfer.
What are other names for a Florida lady bird deed form?
The technical name for a Florida lady bird deed is enhanced life estate deed. Only a very few states—notably including Florida, Michigan and Texas—recognize enhanced life estate deeds. A few states like North Carolina and Maryland use a variation called a life estate deed with powers or life estate deed with special power of appointment.
Lady bird deed is sometimes written as ladybird deed (without the space between lady and bird). The two spellings are used interchangeably in modern Florida real estate practice.
Attorney Practice Note: The informal name lady bird deed comes from a fact pattern used by Florida attorney Jerome Ira Solkoff in his teaching materials. Solkoff used fictional characters to illustrate the use of this type of deed. One character’s name came from former United States President Lyndon Johnson’s wife, Claudia Alta “Lady Bird” Johnson. As Solkoff popularized this type of deed, people began to call it the lady bird deed or ladybird deed instead of the technical name, enhanced life estate deed.
How does a Florida lady bird deed form relate to other Florida deed forms?
Most Florida deed forms use titles that reflect the warranty of title used in the deed.3 A deed’s status as a lady bird deed is independent of whether it provides warranty of title. A lady bird deed can (but does not have to) include a warranty. This means that a lady bird deed can also be another type of deed—such as a quitclaim deed, a warranty deed, or a special warranty deed—depending on the wording of the specific deed.
How can I create a Florida lady bird deed form?
A Florida lady bird deed must satisfy Florida’s requirements for recordable deeds, and it must also include special language that ensures that the deed qualifies as a lady bird deed.
Although lady bird deeds are common in Florida and have been recognized by the Florida government, they are not based on a specific law. Lady bird deeds were created by attorneys to help clients avoid probate at death while retaining control over the property during life. Creating a Florida lady bird deed form requires inclusion of the language customarily used by attorneys and accepted by title insurance companies.
Need a lady bird deed that meets Florida recording requirements?
Our deed creation software includes the language needed for a lady bird deed that is acceptable to Florida title insurance companies and is recordable in all Florida counties. Just complete a user-friendly interview and get a customized lady bird deed in minutes.