Advantages in Florida
1. Avoids Probate
- Property passes directly to named beneficiaries at death, avoiding the time and expense of probate court
2. Retains Control
- The owner keeps the right to:
- Live in the home,
- Sell or refinance it,
- Cancel or change the beneficiaries without their consent
3. Medicaid Planning Benefits
- In Florida, a Lady Bird deed does not trigger a transfer penalty for Medicaid eligibility (because the owner retains control)
- The home is also not considered a countable asset for Medicaid purposes
- After death, the home passes outside of probate, potentially avoiding estate recovery
4. No Gift Tax Trigger
- Because the transfer isn’t complete until death, it typically doesn’t trigger a gift tax.
Important Considerations in Florida
1. Proper Drafting Is Crucial
- Must be drafted carefully to:
- Include the enhanced powers (e.g., power to sell, lease, mortgage),
- Clearly identify remaindermen (beneficiaries),
- Use precise legal language to avoid probate issues.
- A poorly drafted deed can lead to litigation or unintended probate
2. Beneficiary Issues
- If a remainderman dies before the grantor, it can create legal complications.
- You cannot name a contingent beneficiary unless structured with additional planning.
3. Homestead Rights
- In Florida, homestead laws create strong protections and restrictions:
- You can’t disinherit a surviving spouse through a Lady Bird deed on a homestead without their consent
- Minor children also create restrictions — you can’t devise a homestead property if minor children survive you
- These restrictions can override or complicate the deed
4. Title Insurance & Financing
- Some title companies or lenders may hesitate or impose conditions if a Lady Bird deed is involved, especially if the remaindermen try to sell after the grantor’s death
- Beneficiaries must record the death certificate to finalize ownership
5. Property Taxes
- The deed does not affect homestead exemption eligibility during the grantor’s life
- After death, the beneficiaries must reapply for homestead exemption if they occupy the home
When to Use a Lady Bird Deed in Florida
Consider a Lady Bird deed if:
- You want to avoid probate
- You want to retain full control of your property
- You have a simple estate plan involving real property
- You’re planning for Medicaid but still want to protect the family home
Avoid using it:
- When you have a complex estate plan,
- When beneficiaries have creditor or divorce issues,
- If you have minor children and the property is your homestead
Because of the complex interaction with Florida homestead laws, Medicaid rules, and estate planning goals, it’s best to have a Lady Bird deed:
- Drafted or reviewed by an estate planning or elder law attorney licensed in Florida.
As with all such matters, it is advisable to consult with a real estate attorney such as Kistemaker Business Law Group. Our areas of practice include Condo/HOA Law and Litigation, Real Estate Law and Litigation, Business Law and Litigation, and Construction Law and Litigation and Landlord and Tenant Law and Litigation.
