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How Can a “Lady Bird Deed” Help My Florida Estate Planning?


There are a number of estate planning options available to Florida residents who want to transfer their assets without the need for an extended formal probate proceeding. One such option is something commonly referronableed to as a “Lady Bird Deed.” This is a special type of life estate deed that allows you to transfer title to your home while reserving the right to live there, either for yourself or your spouse.

First, let’s backup a bit. You may not be familiar with the concept of a “life estate” deed. Let’s say Allison wants to leave her home to her daughter Caroline. Allison could just name Caroline the beneficiary of her entire estate, including the house, in her will. But that would mean the house would need to go through probate after Allison’s death.

Alternatively, Allison could sign a life estate deed that gives the property to Caroline now, with the caveat that Alison has the right to remain in the house rent-free until her death. Allison would still be responsible for paying for any property taxes and maintenance on the home, but legally the title now belongs to Caroline. One consequence of this arrangement, however, is that Allison may no longer sell or mortgage the house without Caroline’s permission.

This is where a Lady Bird deed can be useful. With this “enhanced” life estate deed, Allison can still leave her house to Caroline without going through probate, but Allison retains a greater degree of control over the property while she is still alive. For example, if Allison needs to sell or mortgage the house after signing the deed without seeking her daughter’s approval, she can.

Lady Bird Deeds & Medicaid

Lady Bird deeds are also helpful if you need to apply for Medicaid. As you may know, Medicaid rules impose strict asset and income limits on applicants. Normally your primary residence (or homestead) is exempt from the “countable assets” against your limit, up to $572,000 in equity as of July 2018. But if you give away any assets during the five years before you apply for Medicaid–known as the “lookback period”–it is treated as countable property.

In plain English, you cannot simply give away all of your property to become eligible for Medicaid. But if you sign a Lady Bird deed, you retain the homestead exemption for your residence, since it is still considered your property. Additionally, after you die and the property transfers under the Lady Bird deed, it is not considered part of your probate estate. This is important because Medicaid can only seek to recover the costs of your medical care against probate assets.

Get Advice on Life Estate Deeds from a Florida Estate Planning Attorney

While Lady Bird deeds may sound the like a great idea, they do carry certain risks. You should never execute any kind of life estate deed without first consulting a qualified Fort Myers estate planning lawyer. Call the Kuhn Firm, P.A., at 239-333-45429 to meet with an attorney today.

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