Lady Bird Deeds

Florida lady bird deeds and homestead rules.

June 20, 2023
Florida lady bird deeds and homestead rules.

Florida Lady Bird deeds and homestead rules.

Here some important things to know about the relationship between lady bird deeds and Florida's homestead rules.

Homestead rules in Florida provide certain protections and benefits to homeowners. The Florida Constitution offers homestead exemptions that can reduce property taxes for qualified primary residences. Additionally, the homestead exemption provides creditor protection, preventing the forced sale of a primary residence to satisfy most debts.  Importantly, the Florida Constitution also restricts the transfer of homestead property via an inheritance if the homeowner has minor children.  The Florida Constitution also prevents a spouse from disinheriting another spouse of the marital homestead property, even if only one spouse is the owner of the home.

1) Homestead exemption: Transferring a property through a Lady Bird Deed does not affect the homeowner's eligibility for the homestead exemption. The property owner can still claim the benefits of the homestead exemption, including reduced property taxes and creditor protection, as long as the property remains their primary residence.

2) Medicaid planning: Florida Lady Bird Deeds can be an effective tool for Medicaid planning, allowing property owners to transfer property while retaining a life estate. However, it's important to note that the property must meet the homestead requirements for Medicaid eligibility purposes. The property must be the primary residence and meet specific equity limits to avoid being considered a countable asset for Medicaid.

3) Creditor protection: Homestead rules in Florida provide significant creditor protection for primary residences. A Lady Bird Deed can help preserve this protection by allowing property owners to transfer the property while retaining a life estate. However, it's important to consider potential challenges from creditors if the property owner faces significant debts, as creditors may still be able to place liens on the property.

4) Minor children: If the homeowner has minor children, then, under the Florida Constitution, they cannot gift their home to anyone other than their children under a will, trust, or lady bird deed.

5) Spouse: If the homeowner has a spouse, they cannot disinherit their spouse of the marital homestead. A surviving spouse is entitled to remain in the home for the rest of their life or to elect to take the property as a 50% tenant in common with the descendants of the homeowner. However, this right can be waived using special language in the lady bird deed provided by statute in Florida or by the execution of a post-marital agreement.

In Florida, Lady Bird Deeds and homestead rules are two critical aspects of estate planning. While Lady Bird Deeds can offer probate avoidance and Medicaid planning benefits, it's essential to ensure that the property satisfies the homestead requirements. Consulting with an experienced attorney is crucial to navigate the complexities and maximize the benefits of both Lady Bird Deeds and homestead rules in Florida.

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