Enhanced life estate deeds, often known as “Lady Bird Deeds,” are a unique estate planning tool, particularly popular in states like Florida.
An Enhanced Life Estate Deed, also referred to as a Ladybird Deed, is a form of Quitclaim Deed that helps an owner transfer ownership of real property to another within the owner’s lifetime without giving away the owners right to live in, mortgage, or sell the property. Upon the owner’s death, the property automatically transfers to a predetermined beneficiary known as a remainderman without going through probate.
Enhanced Life Estate Deeds
No, its recognition varies by state. It’s particularly popular in Florida but may not be recognized or may have different rules in other states. Currently, Florida, along with four other states (MI, TX, VT, and WV) allow ownership of Real Property to be transferred via an Enhanced Life Estate Deed.
Enhanced Life Estate Deeds
Yes, one of its advantages is that the grantor can revoke it at any time during their lifetime, without needing consent from the beneficiaries.
Enhanced Life Estate Deeds
Yes, in some cases. The property may be eligible for a step-up in basis upon the death of the grantor, potentially reducing capital gains taxes if the property is sold by the beneficiaries.
Enhanced Life Estate Deeds
It offers some level of protection against the beneficiaries’ creditors during the grantor’s lifetime. However, it may not protect against the grantor’s creditors.
Enhanced Life Estate Deeds
It can be used as a tool in Medicaid planning, potentially helping to avoid estate recovery for Medicaid expenses. However, this can be complex and depends on specific circumstances and timing.
Enhanced Life Estate Deeds
The grantor remains responsible for the mortgage during their lifetime. Upon the grantor’s death, the beneficiaries inherit the property with the existing mortgage.
Enhanced Life Estate Deeds
Yes, the grantor retains the right to sell the property. However, if sold, the enhanced life estate deed becomes void.
Enhanced Life Estate Deeds
No, the homestead exemption, which provides a reduction in property taxes, remains in effect as long as the grantor (original owner) continues to occupy the property as their primary residence. The use of an enhanced life estate deed doesn’t change this, since the grantor retains ownership and control of the property during their lifetime.
Enhanced Life Estate Deeds
A Florida enhanced life estate deed, often called a “Lady Bird Deed,” and a Florida traditional life estate deed have several key differences:
1. Control During Lifetime:
Enhanced Life Estate Deed: The grantor (property owner) retains full control over the property during their lifetime. They can sell, mortgage, or otherwise dispose of the property without needing consent from the remainder beneficiaries.
Traditional Life Estate Deed: The grantor has limited control. They cannot sell or mortgage the property without the consent of the remainder beneficiaries (those who inherit the property).
2. Protection from Creditors:
Enhanced Life Estate Deed: Offers some level of protection against the remainder beneficiaries’ creditors. The property is not considered an asset of the beneficiaries until the grantor’s death.
Traditional Life Estate Deed: Since the remainder interest is an immediate legal interest, creditors of the beneficiaries may have a claim against it.
3. Medicaid Estate Recovery:
Enhanced Life Estate Deed: In Florida, these deeds are often used to avoid Medicaid estate recovery. The property may not be subject to claims for reimbursement for Medicaid expenses, depending on specific circumstances and timing.
Traditional Life Estate Deed: The property is considered part of the estate and may be subject to Medicaid estate recovery.
4. Ease of Transfer at Death:
Enhanced Life Estate Deed: Allows the property to pass automatically to the remainder beneficiaries upon the death of the grantor, avoiding probate.
Traditional Life Estate Deed: Also bypasses probate, but the lack of control during the grantor’s lifetime is a significant difference.
Contact the Law Offices of Stephen K. Hachey (pronounced Hat-chee) to complete and submit a brief on-online questionnaire with a one-time payment of $750. The Law Offices of Stephen K. Hachey will draft a new Enhanced or Traditional Life Estate Deed for your execution, record the executed deed at the county recorder’s office, and confirm recording.
It’s important to consult with a legal professional to understand the implications fully and to determine which type of deed is more suitable for your specific situation, especially considering the complex nature of real estate and estate planning laws.
