What Is A Lady Bird Deed?
A common estate planning scenario involves a parent who wants to leave their home to their adult children without the need for probate. One option would be to create a revocable trust and transfer the home into said trust. But for people who do not want to bother with the time, expense, or ongoing administrative requirements of a trust, another option would be to sign what is often referred to as a “Lady Bird Deed.”
According to Black’s Law Dictionary, the term “Lady Bird Deed” was “accidentally coined in the 1980s by the Florida lawyer who invented this type of deed and used the names of the [former President] Lyndon Baines Johnson family in a sample deed.” The more technical term for this type of document is an enhanced life estate deed. Florida is one of just a handful of states that recognizes this type of deed.
So let’s start with the basics. When you buy your house, you typically acquire ownership “in fee simple.” This means you have full ownership and control over the property. Likewise, when you sell the property to someone else, they acquire ownership in fee simple.
It is possible, however, to split a fee simple interest into two components, a “life estate” and a “remainder.” Let’s go back to the hypothetical example of a person who wants to leave their house to their children someday. The parent can sign a deed whereby they retain a “life interest” in the house and assign the “remainder” interest to the children.
What does this mean in practical terms? Essentially, the parent continues living in their home just as they have always done. The children have no control over the property. Upon the parent’s death, however, the children receive their “remainder” interest in the property. Since this transfer occurs under the terms of the deed itself, the property does not pass through the parent’s probate estate.
Now, under a typical life estate deed, if the life estate holder wants to sell the property, they need the consent of the remaindermen. But under a Lady Bird Deed–i.e., an enhanced life estate–the grantor retains the right not just to continue living in the house, but also to sell, transfer, or mortgage the property at their discretion and without the consent of the remaindermen. In other words, the grantor retains full control over the property under a Lady Bird Deed.
Speak with a Florida Probate Litigation Lawyer Today
Lady Bird Deeds are not without risks. If the remainderman has any creditors, they may be able to attach a lien against their interest in the property. Additionally, a Lady Bird Deed cannot be used to circumvent Florida’s homestead laws, which prevent a person from disinheriting a spouse or minor child. Legal disputes may also arise if a remainderman dies before the grantor and it is not clear who will then inherit the property when the grantor dies.
If you need legal advice or representation in connection with a probate dispute, contact Pompano Beach estate and trust litigation attorney Mark R. Manceri today.
