Lady Bird Deed: What is It and What Are the Benefits?
If you are exploring your options for estate planning, you may have come across the term “lady bird deed.” A lady bird deed, which is also referred to as an “enhanced life estate deed,” is a crucial tool for estate planning that offers several benefits. Below, you will find a list of benefits of a lady bird deed as well as potential disadvantages.
What Is a Lady Bird Deed?
A lady bird deed allows a property to pass automatically to certain designated beneficiaries upon death without the need to go through probate in Florida. Basically, this is a deed in which the property owner reserves “life estate interest” while naming one or several beneficiaries (more formally called “remaindermen”) who will receive property upon the owner’s death.
What Are the Benefits of Using a Lady Bird Deed in Your Estate Plan?
Here is a list of benefits of implementing a lady bird deed in your estate planning strategy:
- You retain your ownership rights. The property owner retains the right to sell, mortgage, or otherwise dispose of the property without having to seek the beneficiaries’ permission. In other words, by naming beneficiaries, the owner of the property does not give up any ownership rights over the property.
- You maintain control of the property. You get to maintain complete control of your property during your life even after transferring ownership of the property through a lady bird deed.
- You can change beneficiaries without their permission. The third advantage of using a lady bird deed is that you can change the remainder beneficiaries any time you want, and you will not even need their permission to do so. You can also “revoke” the lady bird deed altogether, if you later decide that this is not appropriate for you.
- The property will not go through probate. For many people, one of the greatest benefits of using a lady bird deed is that their property will not have to through the probate process.
Potential Disadvantages of Implementing a Lady Bird Deed in Your Estate Plan
Although the benefits usually outweigh the disadvantages, you should also be aware of the potential drawbacks of using a lady bird deed as part of your estate plan.
- You may not avoid probate altogether. If you are using a lady bird deed for one piece of real property, that property will avoid probate. However, a lady bird deed does not protect you from probate for all other assets.
- A trust might be a better alternative. Depending on your situation and assets, creating a trust might be a better option than using a lady bird deed. A trust allows you to avoid probate and much more flexibility on how you leave assets to love ones.
- You may still need to get the permission of the beneficiaries. In most cases, the property owner does not have to get the permission of the beneficiaries if they choose to sell or mortgage a property with a lady bird deed. However, under certain circumstances, permission may still be necessary (especially if the deed is not properly drafted).
Consult with our St. Petersburg estate planning attorney to determine whether you should implement a lady bird deed in your estate plan. Schedule a consultation with our award-winning lawyers at Legacy Protection, LLP, by calling at 727-471-5868.