Lady Bird Deeds vs. Traditional Wills: Which is Right for Your Estate Plan?

Estate planning is vital so your assets get distributed according to your wishes, making the distribution easier for your family when you pass away. Knowing the tools available to Florida residents—Lady Bird Deeds and Traditional Wills—is key to creating an estate plan that fits you. Both have pros and cons, but which is right for you? This will review the differences between Lady Bird Deeds and Traditional Wills, including the benefits, drawbacks, and how said deed types fit into your overall estate plan.

Understanding Lady Bird Deeds – An Enhanced Life Estate Deed

Lady Bird Deed Florida is what we commonly refer to as an Enhanced Life Estate Deed. This estate planning tool allows the property owner, or grantor, to retain control of the property during their lifetime and also name a remainder beneficiary who will inherit the property when the grantor passes away. Unlike Traditional Wills, which go through probate, Lady Bird Deeds are a primary way to transfer property ownership without probate.

A key feature of a Lady Bird Deed is the grantor, as the life estate holder, has the right to sell, mortgage, or even revoke the deed during their lifetime without the consent of the remainder beneficiary. This flexibility makes Lady Bird Deeds a popular choice for many Florida property owners who want to retain control of their assets and avoid probate.

Traditional Wills: A Time-Honored Estate Planning Tool

On the other hand, Traditional Wills have been around for centuries. A will lets you spell out how you want your assets distributed after you pass away. Unlike Lady Bird Deeds, a will covers not just real property but also personal belongings, bank accounts, investments, and other assets. But it’s important to note that a will must go through probate, which can be a long and expensive process for the estate and its beneficiaries.

While a will is a broad approach to estate planning, probate is a big drawback. Probate can delay the distribution of assets and result in extra costs like court and attorney fees. Despite these challenges, Traditional Wills are still important in many estate plans, especially for those with complex estates or who want to ensure their wishes are documented and legally binding.

Comparing Lady Bird Deeds and Traditional Wills

When considering whether to use a Lady Bird Deed or a Traditional Will, it is essential to understand the key differences between these tools.

1. Avoiding Probate: One of the primary benefits of a Lady Bird Deed is it avoids probate. Since the property automatically goes to the designated remainder beneficiary when the grantor passes away, there’s no need for probate. This saves the grantor and their heirs time, money, and stress.

2. Retaining Control During Lifetime: A Lady Bird Deed allows the grantor to have complete control of the property during their lifetime. They can sell, mortgage, or revoke the deed without the remainder beneficiary’s consent. A Traditional Will only takes effect after the testator passes away and offers no control over the assets during the testator’s lifetime.

3. Flexibility and Revocability: Lady Bird Deeds are flexible; the grantor can change their mind about the property transfer. This flexibility is helpful for those needing to sell the property or change beneficiaries. Traditional Wills are revocable during the testator’s lifetime but not as flexible regarding specific property transfers. A traditional life estate deed splits property ownership between the life tenant and the remainderman, creating a life estate interest. This means the life tenant can use the property during their lifetime but can’t sell or mortgage it without the remainderman’s consent. A Lady Bird Deed allows the grantor to retain these rights without the remainder beneficiary’s approval.

4. Comprehensive Estate Planning: While Lady Bird Deeds are great for probate avoidance and control of real property, they don’t cover other areas of the estate like personal property, investments or bank accounts. A Traditional Will is a more comprehensive approach that allows the testator to address all areas of their estate in one document.5. Medicaid Planning and Protection: In some cases, a Lady Bird Deed can be an expertly helpful tool for Medicaid planning. By having control of the property and ensuring it’s not included in the person’s probate estate, the grantor may be able to protect the property from Medicaid estate recovery. However, this requires careful planning and should be discussed with an attorney.

Scenarios Where a Lady Bird Deed May Be More Beneficial

1. Avoiding Probate in Florida: For many Florida residents, avoiding the probate process is a top priority. A Lady Bird Deed can help achieve this goal by ensuring the property passes directly to the remainder beneficiary without probate. A Lady Bird Deed can safeguard properties from creditors, and Medicaid claims after the property owner’s death. This can be particularly beneficial for those with limited assets who want to streamline the estate settlement process.

2. Retaining Control of the Property: A Lady Bird Deed is great for property owners who want full control of their real estate during their lifetime. Whether they want to sell the property, get a mortgage, or just want the option to change beneficiaries, a Lady Bird Deed gives them the flexibility to do so.3. Medicaid Planning: For those worried about Medicaid estate recovery, a Lady Bird Deed can be a helpful tool. By ensuring the property is not included in the person’s probate estate, the grantor may be able to protect the property from being used to repay Medicaid benefits. But this should be discussed with an attorney to make sure it complies with Florida law.

When Traditional Wills May Be the Better Choice

A Traditional Will may be better for those with a complex estate with many assets. A will allows the testator to address all areas of their estate, real property, personal property, bank accounts, and investments. This comprehensive approach ensures all assets are distributed according to the testator’s wishes.

A well-drafted Traditional Will provides legal clarity and enforceability so the testator’s wishes are followed. In cases where beneficiaries may disagree, a Traditional Will can be a clear, legally binding document that outlines the testator’s intentions.

A Traditional Will may be more flexible for those with non-homestead properties. While Lady Bird Deeds are used for homestead properties, a will can be used for a broader range of real estate assets, non-homestead properties, and out-of-state real estate. A traditional life estate deed has limitations as it doesn’t allow the grantor to sell or get a mortgage on the property without the beneficiary’s consent. In contrast, a Lady Bird Deed gives more flexibility to property rights.

Combining Lady Bird Deeds with Traditional Wills for a Comprehensive Estate Plan

The best estate planning strategy is often to use a Lady Bird Deed Florida with a Traditional Will. When to use a Lady Bird Deed is especially important in estate planning for probate and Medicaid planning, so it’s an excellent tool for homeowners to keep their residence and designate heirs for property to pass after they pass away. By doing so, they can use both tools to their advantage and create a complete estate plan.

A Lady Bird Deed can pass real property directly to the remainder beneficiary upon the grantor’s death, avoiding probate and simplifying the estate settlement. This is especially useful for homestead properties or other considerable real estate assets. For other areas of the estate, personal property, bank accounts, and investments, a 

Traditional Will can provide the legal framework to ensure these assets are distributed according to the testator’s wishes. A will can also cover any residual property not covered by the Lady Bird Deed, so it is a complete estate plan.

By using a Lady Bird Deed with a Traditional Will, individuals can minimize conflicts among beneficiaries. The will can clarify how the estate should be divided, and the Lady Bird Deed can pass specific real property on to the intended beneficiary without probate.

Key Takeaways

Using a Lady Bird Deed Florida or a Traditional Will depends on your individual estate planning needs and goals. Both have value but serve different purposes and are more suitable in different situations. Now that you know the differences and sides of each, you can make an informed decision to protect your assets and have your wishes followed.

If you want to avoid probate, keep control of your property during your lifetime and do Medicaid planning, a Lady Bird Deed may be the way to go. But if you have a more complex estate or need a complete asset distribution plan a Traditional Will may be the better choice.In many cases, using a Lady Bird Deed with a Traditional Will is the best of both worlds: a flexible, effective, and legal estate plan. Whatever your choice, make sure you work with an experienced estate planning attorney in Orlando to have your estate plan customized to your needs and Florida law.

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