Lady Bird Deeds: A Rare but Beautiful Floridian Species
Did you know that you can designate your house as a non-probate asset without all the legal maneuverings of setting up a trust and transferring possession of your house to it? You can keep your house out of probate by executing a life estate deed. It is not quite as simple as designating a transfer on death (TOD) beneficiary for your house, but it is quick and inexpensive to execute a life estate deed. When you sign a life estate deed, you designate the heir as a remainder beneficiary, which means that the heir inherits the house only after another person, designated in the life estate deed as the life tenant, dies. Some people list themselves as life tenants, while others list their spouses. In most states, deciding whether to sign a life estate deed for your house is simply a matter of weighing the pros and cons, but in Florida, there is another option, namely an enhanced life estate deed, also known as a lady bird deed. To find out more about enhanced life estate deeds, contact a Dade City estate planning lawyer.
Ordinary Life Estate Deeds Are Not Especially Streamlined
Once the life tenant dies and the remainder beneficiary inherits the house, the remainder beneficiary is often grateful that the grantor executed the life estate deed and enabled the house to pass to the remainder beneficiary outside of probate. Until that happens, though, life estate deeds can create more conflicts than they resolve. For example, the grantor cannot sell the house, pledge it as collateral for a home equity loan or reverse mortgage, or refinance its current mortgage loan unless the remainder beneficiaries consent to this action. It is as if you are allowing your younger relatives to meddle in your life. If you undertake any of these transactions, it might remove some of the creditor claim protection that you planned to derive by designating the house a non-probate asset. For example, if you sell the house while you are alive, the money you get from the sale will eventually become part of your estate during probate, and the probate court can order the personal representative to pay creditor claims from it.
What Makes Lady Bird Deeds So Elegant
A lady bird deed is no ordinary life estate deed, and Florida is only one of five states that allows them. When you execute a lady bird deed, you reserve the right to sell, refinance, or borrow against your house while you are alive, and the remainder beneficiaries cannot stop you. When you and the life tenant have both died, the remainder beneficiaries inherit the house; they also inherit the consequences of any transactions you made regarding the house.
Contact a Florida Estate Planning Attorney About Keeping Your House Out of Probate
A probate attorney can help you turn your house into a non-probate asset by signing an enhanced life estate deed. Contact The Law Office of Laurie R. Chane in Dade City, Florida to discuss your case.
Source:
trustandwill.com/learn/enhanced-life-estate-deed
