It is common to find Florida residents who use the last will or a trust to convey real estate upon death. While both solutions work for different purposes, it is possible to bequeath property upon death using a deed.
In this article, you will discover whether Florida has a transfer-on-death deed.
Does the State of Florida Have a Transfer on Death Deed? – The Verdict
Often used as an estate planning tool, an enhanced life estate deed allows you to transfer real property to one or more beneficiaries during your lifetime to ensure a seamless ownership transition upon death.
Currently, only five US states allow these transfer-on-death deeds – Florida, Texas, Michigan, Vermont, and West Virginia.
The arrangement is simple to understand. The owner of a property (referred to as its “life tenant”) drafts a deed with specific language to retain ownership over the asset during his or her lifetime while conveying it to specific individuals upon death.
The individuals named in the deed are known as remaindermen. Up until the life tenant’s passing, he or she has the right to sell, mortgage, gift, or transfer the ownership of the property – all without the consent of the remaindermen.
When the life tenant passes away, the ownership interest automatically vests the remaindermen.
An enhanced life estate deed is often used by seniors to bequeath property to adult children. This way, they can remain living in a property under their control and guarantee an efficient inheritance process.
Enhanced Life Estate Deeds Florida – Advantages vs. Disadvantages
Also referred to as Lady Bird deeds, enhanced life estate deeds offer several benefits. Similar to a settlor of a living trust, the life tenant remains in control of the property throughout his or her lifetime.
While a living trust requires more paperwork and expenses involved, a Lady Bird deed offers a simple and inexpensive solution that allows the life tenant to automatically transfer the property outside of probate court.
Once a property is conveyed through a transfer-on-death deed, it is not considered a probate asset. Additionally, a property conveyed through a Lady Bird deed in Florida:
- Does not impact the life tenant’s eligibility for Medicaid benefits
- Is not subject to gift tax payable on the transfer of the asset upon the life tenant’s death
- Is subject to certain tax advantages at the state and federal levels
- Retains Homestead exemption, which results in extended protection against creditors
Please note that enhanced life estate deeds are not perfect either. The most common issue is determining the outcome of the property after the life tenant’s death if the remaindermen predecease him or her.
Once the life tenant dies, the remaindermen are vested with full ownership of the property. Cases involving multiple beneficiaries often result in disputes, as all the parties involved must agree to sell or dispose of the property otherwise.
Mortgaging a property titled with a Lady Bird deed may also limit the options of title insurance, as many title insurance companies are not willing to underwrite a policy for a property subject to a transfer-on-death deed.
While Lady Bird deeds do not affect the life tenant’s eligibility for Medicaid during his or her lifetime, the estate must pay back to Medicaid after the property’s original owner is dead.
Florida Transfer on Death Deeds – Immediately Contact Jurado & Associates, P.A.
A well-versed attorney from Jurado & Associates, P.A. is willing to help you identify whether a Lady Bird deed is an ideal option for your case. Call us today at (305) 921-0976 or email Romy@juradolawfirm.com for an individual assessment.