When a person dies, there must be a legal process to determine how to distribute their property. In Florida, this process is called probate.
Probate isn’t necessarily bad. In fact, it’s a necessity in many ways. However, the process can be slow and cumbersome. It can also be expensive: It requires a lot of time in court, and court fees come out of the estate, leaving less to go around for the beneficiaries.
Many estate planning strategies are designed to minimize or avoid the hassles and expense of probate. For instance, when you place assets in a trust, they do not become part of your estate when you pass away. Because they’re not part of your estate they can go to your beneficiaries without going through probate.
Another strategy for avoiding probate involves a so-called lady bird deed.
Transferring real estate
A lady bird deed provides a way for you to live in a home up until their death, whereupon the ownership of the property transfers automatically to your named beneficiary. Your beneficiary may be a relative, a friend or even a trust.
Because the deed specifies that the property transfers to another owner immediately upon your death, the home is not considered part of your estate, and so it does not have to go through probate. This can save your loved ones a lot of time and expense.
One of the great advantages of having a lady bird deed for your home is that it allows you to enjoy the rights of ownership in your home for the rest of your life. That means you can change your mind, create a new deed, sell the home or make other changes.
A lady bird deed can also help you maintain eligibility for Medicaid benefits.
Florida is one of only a handful of states that recognize lady bird deeds, but many states recognize transfer-on-death deeds, which can achieve similar ends.
