Lady Bird Deeds and Avoiding Probate

Wed, Oct 15, 2014

Elder Law, Estate Planning

Some rights reserved by asinensisNo, this doesn’t have anything to do with Lady Bird Johnson (even though that would be cool).

Also known as an enhanced life estate deed, these types of deeds can cause real troubles.

A lady bird deed still allows you to sell the property and/or benefit from it during your lifetime, unlike some tactics that don’t allow for this type of flexibility. That is because the lady bird deed doesn’t come into play until the owner’s death.

Many people have turned to the lady bird deed as a way to avoid losing their property to Medicaid. The lady bird deed also might allow you to avoid gifting tax implications that other property arrangements might create.

Not all states allow lady bird deeds, though Florida does. However, not all estates will benefit from their use, but it is something to consider in certain cases. A qualified estate planning attorney would provide the sound advice you need in deciding whether a lady bird deed is appropriate in your situation. You also need to be sure that the lady bird deed is drawn up correctly, or it could cause trouble with insurance and perhaps the probate process. It is also often inappropriate if you have a mortgage.

A lady bird deed is just one way to avoid probate, and we all know how much we want to avoid probate. That’s because probate is a long, tedious, expensive process. There are many other strategies for avoiding it.

We have discussed other ways to avoid probate in the past. Some of these posts include:

Trusts are another excellent way to avoid probate. A trust allows you to specifically define how you want your property and money divided up ahead of time.

Life insurance beneficiaries are another great way to avoid probate. That is because the money passes directly to the person you choose, right to them. It doesn’t matter what is in your will when it comes to life insurance beneficiaries. This is similar to retirement accounts and other types of insurance and accounts with beneficiaries.

Gifts are another way to avoid probate. There are certain tactics for giving gifts to avoid probate and sometimes taxes. This can all be done legally because of various tax laws that allow for it. Gifts are a way you can give an inheritance of sorts early.

Uniform Gifts to Minors are another way to avoid probate, in that you can gift the money to the minor while you are still alive with the advantage of avoiding an estate that needs to be probated.

Education accounts are also another great way to avoid probate. They work in a similar way to the Uniform Gifts to Minors, in that you can fund education accounts now…with tax advantages to the person receiving the gift as well.

Most importantly, a good will is essential to the probate process. The best idea is to maximize the ways you can avoid probate, and then have a good will. This can simplify probate and often make it more straightforward. Dying intestate (without a will) is not the way to go.

Attorney Christopher D. Smith, Sr. is designated a Board Certified Consumer Bankruptcy Lawyer by the American Board of Certification.  SmithLaw is located in Lakewood Ranch, Florida.  Attorney Smith concentrates on bankruptcy, civil litigation, probate, estate planning, and elder exploitation cases in the Sarasota and Bradenton area.  Call 941-202-2222 to learn more.  SmithLaw offers free consultations in certain areas, including consumer bankruptcy, probate, and personal injury matters.

Image: Some rights reserved by asinensis

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