Life estate deed vs enhanced life estate deed vs lady bird deed vs transfer on death deed
Attys. Tom Olsen: Holley, why don't you tell the listeners what is the difference between an ordinary life estate deed and an enhanced life estate deed?
Attys. Holley Knapik: Absolutely. In an ordinary life estate deed, you, the owner of the home, are saying, "I'm going to retain a life estate in my property, and upon my passing, I am going to then pass the home off to my kids." If you have two kids, you're going to pass them off to the two kids. Everyone now is on that deed. If you, the homeowner, decides, "You know what? I'm selling my property," you can sell your property, but you will need your two kids to join in and agree to the sale of that property. It's locked in, it's written in stone, and you can't change it without their knowledge, signature, and consent.
Now, compare that to the enhanced life estate deed, where within the deed itself, you're reserving all rights of ownership, the right to sell, the right to profit from the home income without the signature, knowledge, and consent of the beneficiaries. Their interest does not come into play until you've actually passed away. You retain all of your rights of ownership while you're alive. It's flexibility for the owner and peace of mind.
Attys. Tom: Holley did a great job explaining the difference between those two things. I don't know if I've ever told you, but within the last couple years, I had a mom and her kids come into the office, and they wanted an ordinary life estate deed. The vast majority of our clients would say, "We want an enhanced life estate deed," also known as a lady bird deed, "because we want to maintain complete control over our piece of property and change our minds if we want to," but they were all on board that they wanted an ordinary life estate deed.
Why? Because have been knocking on mom's door and saying, "Hey, I want to put some sealant on your driveway," or " Hey, I want to put a new air conditioner in or new windows in," and mom had already signed forms giving them liens against her home. Mom and kids are all concerned about strangers knocking on elderly doors, mom's door, and that's a real thing here in Florida.
Attys. Holley: It really is.
Attys. Tom: By doing an ordinary life estate deed, mom would no longer be able to grant anybody a lien against that home. For anybody to put a lien against that home, it would require both the signature of mom and the kids with this ordinary life estate deed.
Attys. Holley: Yes, it would. That is a perfect example of where it is a good tool to have.
Attys. Tom: [unintelligible 00:02:39], again, that they had done their homework prior to coming and seeing me. They knew the distinction between an ordinary life estate deed and an enhanced life estate deed, and they knew what they wanted. I understood what they were thinking, but I made sure that they were very clear about the distinction. I talked to mom in a very clear, understanding way to make sure she understood the distinction and that she was okay with this, and she was very okay with it.
Attys. Holley: Again, that's where having a little bit of a knowledge when you walk through the door helps us help you even more.
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