Estate and Elder Law Planning Using Lady Bird Deeds – Part 2 General Discussion

Estate and Elder Law Planning Using Lady Bird Deeds – Part 2 General Discussion

A Lady Bird Deed is a life estate deed which reserves the right in the life tenant to divest the remainderman of his or her interest by conveying title to a third party without joinder of the remainderman. A Lady Bird Deed can be created by the owner or by a third party by reservation of the right to reconvey the remainder interest to another person or entity. Oglesby v. Lee 73 So. 840 (Fla. 1917).  The typical advantages of using a Lady Bird Deed are to avoid probate, maintain homestead tax exemption, avoid liability to the remainderman for waste, maintain control, eliminate the requirement for the remainderman to join in a future conveyance or mortgage, and retain all profits from a sale by the life tenant. See TN 2.11.06. Using a Lady Bird Deed will also qualify for a step up in basis under IRC §1014, as a retained lifetime interest under IRC §2036 (a). Furthermore, the Department of Revenue does not consider the creation of a Lady Bird Deed subject to Documentary Stamp Tax. Letter of Technical Advice No. 00B4-024 addressed to Fund member, Mike Pyle, Esq. (2000). There should also not be a loss of homestead exemption or re-assessment of the property value. See F.S. 193,155, F.S. 193.1554, and AGO 2001-31 (April 26, 2001).

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