Lady Bird Deed

Florida “Lady Bird” Deed

Owners of Florida real estate have always sought ways of transferring title their home or other real property at death without the cost and delay of probate. While inter vivos trusts are popular, such estate planning schemes are usually too expensive for persons of modest means. Recent legislative enactments have also imposed burdens on trusts that create additional costs and delays at the death of the grantor.

Another tool employed by many Floridians to avoid probate is a lifetime conveyance of their property to their ultimate beneficiary (legally called “remainderman”), but reserving the use and possession of the property for the remainder of the owner’s life (legally called a “life estate”). On the surface this method of transfer is deceptively simple, yet there can be serious unintended consequences of such an outright transfer. Once the deed is signed, sealed and delivered it becomes irrevocable. If the owner needs to mortgage or even sell the property, it cannot be done without the remainderman’s consent. Also, the remainderman’s creditors can attach his or her interest in the property – definitely an unwanted situation.

Florida Enhanced Life Estate Deed

To avoid the unintended and unwanted consequences of an absolute conveyance of the owner’s property, Florida legal practitioners have begun to use the so-called “Lady Bird Deed” used by the late President Lyndon Johnson to convey his property to Lady Bird prior to his death. The correct name of this instrument is the Enhanced Life Estate Deed.

The Enhanced Life Estate Deed adds specific language to the deed that reserves the right of the owner to mortgage or sell the property during the owner’s lifetime and use the proceeds for the owner’s own benefit, free and clear of the remainderman. Language in the deed stating that the owner reserves “for a life estate, without any liability for waste, and with full power and authority in the life tenant to sell, convey, mortgage, lease, or otherwise manage and dispose of the property described herein, in fee simple, with or without joinder of the remainderman, and with full power and authority to retain any and all proceeds generated thereby” serves to create this “enhanced” life estate. This added flexibility satisfies the concerns of the owner over the ability to sell or mortgage the property should an unanticipated need arise or should the owner simply desire to avoid a transfer of the property to the remainderman for any reason that subsequently arises.

Of course, as with any evolving legal concept there are still questions with the Enhanced Life Estate Deed, such as the legal rights of the remainderman’s creditors should the life tenant decide to sell or mortgage the property after the creditor obtains a judgment against the remainderman. These issues will have to be decided on a case-by-case basis by the Florida courts, but for now the Florida Enhanced Life Estate Deed has become an attractive way to pass title to real estate and avoid probate.
May 2015
July 2013
February 2013