By: Ned Hale, Fort Myers Board Certified Real Estate Attorney
An enhanced life estate deed is an effective and inexpensive way to avoid probate for a real estate asset while maintaining almost all of the benefits of standard “fee simple” ownership. It is sometimes called a “transfer on death” deed or a “Lady Bird” deed.
Frequently a decedent’s main asset of any real value is his or her home. But unfortunately, usually that asset must go through lengthy and expensive probate proceedings. That is because by the time a decedent dies, it is too late for him or her to “plan” his or her estate. The heirs are left to do the work and pay the attorneys and accountants to probate and account for the estate.
Fortunately, the living can still plan their estate. For people whose main asset is their home, or for those who have already made arrangements for the transfer of their other assets (i.e., joint ownership or transfer on death designations), an enhanced life estate deed may be in order.
What is it? It is a simple warranty deed recorded in the public records whereby the owner states in thedeed that he or she is the owner of the property for the span of his or her life. During his or her life, thedeed states that he or she maintains full control of the property. The deed states that he or she can sell the property (at fair market value) or mortgage the property and keep all of the proceeds generated thereby. It also states that he or she can improve the property or even let it fall into disrepair. He or she can do all of this without needing anyone else’s signature. And if the property is homesteaded, there is no effect on the homestead tax exemption and Florida constitutional homestead protection from creditors. And only nominal documentary stamps (all of seventy cents) are due when he or she signs the enhanced life estate deed, since there is no change in the beneficial ownership of the property.
The deed goes on to state that upon the owner’s death, the property automatically goes to whomever is named in the deed. Those named parties are called “remaindermen.” (The remainermen are usually the decedent’s children). The remaindermen would just record the decedant’s death certificate in the public records. Then the property automatically belongs to the remaindermen. They can then keep the property or sell it. That’s it. No expensive and lengthy probate. Nothing else to keep track of. No trust hassles or costs. And their resulting ownership is fully insurable by a title company.
The only drawback of an enhanced life estate deed is that if the owner does sell the property during his or her life, then it must be sold at fair market value. In other words, the owner cannot simply “disinherit” one or more of the remaindermen by signing new deed back to himself or herself, or by signing a new enhanced life estate deed which leaves out one of the original remaindermen. The only way to disinherit the remaindermen would be to simply sell the property while alive and keep the proceeds. That is a minor drawback, and it is a small price to pay to enjoy the significant benefits that an enhanced life estate offers.
Choose Enhanced Life Estate Deeds to Secure Your Assets
In order to ensure your assets goes to the right hands after the death of the owner, they could opt for an enhanced life estate deed.