A common question presented to our office during Estate planning consultations is how to avoid probate in Florida. Complicated and high value estates may benefit from the creation of a Trust and the management of assets into a trust to avoid the costs and expenses of a probate administration.
Often the only asset or major asset subject to probate will be a home. A very simple and cost-effective method to avoid the costs associated with a Florida probate proceeding related to a property is accomplished through the implementation of an Enhanced Life Estate Deed or “Lady Bird” Deed. The deed is executed by the current owner of the property and provides that the owner will retain the ability to use the property and continue to have unrestricted ownership and upon the death of the owner it will pass automatically to the designated person called the remainder.
The difference in a life estate deed versus the enhanced life estate deed (aka Lady Bird Deed) is that unlike a regular life estate deed, with an enhanced life estate deed you retain the ability to sell or mortgage your interests in the property during your lifetime. This is a major advantage when compared to traditional life estate deeds as it gives the current owner of the property flexibility and the added advantage of having the property’s ownership pass directly to their designated remainder (beneficiary) upon death.
The major advantages of an Enhanced Life Estate Deed are: (1) Avoiding Probate (2) Retaining the ability to sell, mortgage or cancel the deed (3) retaining your homestead rights (4) Medicaid planning.
A few potential disadvantages: (1) If the designated remainder interest dies before the grantor then it may need to be redone (2) If multiple remainders are identified they will be inheriting property together (consider whether this would be a good option if you have multiple heirs you want the property to pass automatically to. (3) Can be complicated if the vested remainder is a minor child. (4) You cannot disinherit your spouse or minor child. Your spouse has the authority to consent to the deed, but a minor child would not.
Overall Enhanced Life Estate Deeds (a/k/a Lady Bird Deeds) are a great tool for most households in Florida. The avoidance of Probate costs, attorney fees and the speed in which the transfer of ownership will occur (automatically) makes Enhanced Life Estate Deeds an excellent tool for Florida Estate planning.
If you are interested in obtaining an Enhanced Life Estate Deed, have questions or would like to discuss your Estate plan in general, give us a call for a no obligation free consultation.