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What is a Lady Bird deed and what does it do?
What is the difference between a regular life estate deed and lady bird deed?
They both have similar characteristics. Both transfer the property to another party (usually the children) upon the death of the owner. However, a "regular" life estate deed gives the children a present interest in the property. That means you must obtain their permission if you want to sell, mortgage or transfer the property to someone else (like a neighbor). The legal name for a lady bird deed is: enhanced life estate deed. This gives you full power and control over your house as long as you live. Your children do not have a present interest in the property. They have no interest in the property until you die. Therefore, you can sell the property, mortgage the property or deed the property to someone else without the permission of the children.
Can I use lady bird deed to transfer property in another state?
No, a lady bird deed is only recognized in Florida, Texas, Michigan, Vermont and West Virginia. You may use a lady bird deed to transfer property in any county in any of those states. In states other than Florida, Texas, Michigan, Vermont and West Virginia, you may leave property to someone with a Florida will; that is, you do not need a will in every state in which you own property. An ancillary estate will be opened in the other state, which will recognize the Florida will.
Do I lose my homestead tax exemption or medicaid eligibility if I sign a lady bird deed
No, your house is still exempt under medicaid rules because the person receiving the property does not receive any interest in the property until after your death.
Can't I just add my child's name to my deed?
You can, but it causes major problems with the homestead tax exemption and medicaid eligibility requirements. You also give away part of your power over the property, including your ability to sell or mortgage the house. If you add a name to your deed, the government may see it as "transferring assets" and remove your homestead tax exemptions and medicaid eligibility. Always talk to an attorney before signing any deed transferring any interest in your home.
What happens if I have a mortgage on my property when I die and I've signed a lady bird deed?
Children can chose to assume the mortgage or they can let the lender foreclose on the house. The children will not be liable for your debt if they allow foreclosure.
The Florida lady bird deed allows property to be automatically transferred to a new owner when the current owner dies without having the need to go through probate. It also allows the current owner to retain total control over the property during his or her lifetime, including the right to change his or her mind about the transfer.