Lady bird deeds, also known as enhanced life estate deeds, are highly useful but relatively uncommon estate planning tools. They are uncommon in part because only five states currently allow their use. Florida is one of those states.
Property owners planning for the future of their residences may benefit from drafting a lady bird deed that grants them control of the property now and allows for the transfer of the property to a beneficiary in the future. What are the common benefits associated with a lady bird deed?
1. Bypassing probate
When an owner’s interest in real property is part of their estate, it must pass through probate court. There may be a significant delay in the final transfer of ownership. Their beneficiary might wait years. Lady bird deeds bypass probate and speed up the transfer of ownership to the selected beneficiary.
2. Medicaid protections
Lady bird deeds offer benefits to adults who believe they may require Medicaid for long-term care. They do not need to worry about losing equity to estate recovery efforts after their death. A deed executed years before an owner needs Medicaid benefits can protect their equity from estate recovery claims.
3. Financial protection for beneficiaries
The owner who drafts a lady bird deed agrees to limit their use of the property for the remainder of their life. Specifically, they generally cannot sell or give away the property, as the beneficiary is now a co-owner with protected legal rights.
People who intend to have their homes passed to a specific person after they die may want to consider adding a lady bird deed to their estate plans. The right documents can help limit the loss of home equity and speed up the transfer of ownership.