What Is Florida's Lady Bird Deed Law?

The "Lady Bird" deed, an enhanced life estate deed, is a unique legal instrument used in Florida to transfer real estate upon the owner's death while retaining control during their lifetime. Named after Lady Bird Johnson, this deed offers several benefits, particularly for estate planning.

Here are the critical aspects of the Lady Bird law in Florida:

Key Features:

1. Retained Control:

   • The grantor (property owner) retains full control over the property during their lifetime. This includes the right to sell, mortgage, or otherwise manage the property without the remainderman's consent (the person who will inherit the property).

2. Avoids Probate:

   • Upon the grantor's death, the property automatically transfers to the remainderman without going through probate. This simplifies the transfer process and reduces legal expenses and delays associated with probate proceedings.

3. Medicaid Planning:

   • The Lady Bird deed can be beneficial for Medicaid planning. Since the property is not considered a part of the probate estate, it may be protected from Medicaid estate recovery, potentially allowing the property to pass to heirs without being used to repay Medicaid benefits received by the grantor.

4. Tax Benefits:

   • The remainderman may benefit from a step-up in basis for capital gains tax purposes, which means the property's value is adjusted to its fair market value at the time of the grantor's death. This can reduce capital gains taxes if the property is sold.

5. Flexibility:

   • The grantor can change the remainderman or revoke the deed anytime during their lifetime, providing flexibility in estate planning.

How It Works:

• Creating the Deed: The grantor creates an enhanced life estate deed that names themselves as the life tenant and specifies the remainderman who will inherit the property upon death.

• Recording: The deed is recorded with the county recorder's office, making it a public record.

• Life Tenant Rights: The grantor retains all rights to use and control the property during their lifetime.

• Automatic Transfer: After the grantor's death, the property automatically transfers to the remainderman, bypassing probate.

Given the complexities involved in creating and executing a Lady Bird deed, consulting a real estate attorney is essential. An attorney can ensure the deed is drafted correctly and recorded and provide guidance on how it fits into overall estate planning goals.