Lady bird deed vs trust to avoid probate on your home

Attorney Tom Olsen: Let's go to work and next in line is Jim from [unintelligible 00:00:02]. Jim, you're on WDBO, go ahead.

Jim: Hey Tom. Good morning. Just calling about you did a Lady bird trust for me recently.

Tom: All right.

Jim: Which worked very well, but a friend of mine chose the other route and had her residential property put in the trust and to be conveyed to the beneficiary. Which of those two ways is a better way or are there downsides to either?

Tom: I would say both of them are going to accomplish the goal of avoiding probate, but I would say this. A Lady bird deed, simple. A living trust, like she's talking about, complex. We just did a simple way. She did it in a more complex way.

Jim: There's really no tax benefit or anything like that you can think of?

Tom: No, absolutely.

Jim: It does accomplish the same goal.

Tom: There'd be no tax differences at all between those two things?

Jim: Okay.

Tom: Thank you. Holley [crosstalk] [unintelligible 00:01:04]

Jim: Anyway, we'll talk to you soon.

Tom: All right, Jim, thank you for calling. We appreciate it, Holley, when we do our workshops on easy ways to avoid probate, one of the things I tell people is, look, if you call most attorneys in Florida and you speak these words, "I want to avoid probate," they're going to try and say a living trust. Why?

Holley: It's more expensive. It's a lot more pages and a lot of words. As you've said, attorneys like to charge by the word.

Tom: I had a lady come see me. She actually brought her mom and precious little mom, she's 90 years old and she brings me her living trust and I go, "Well, what does Mom own?" She's got a checking account and she rents an apartment and OMG, this trust, oh my God, 50 pages long.

Attorney Holley Knapik: Oh my goodness.

Tom: 20 page will. It was unbelievable. Unbelievable that an attorney would put a lady with that small of wealth into a living trust.

Holley: Exactly, but we know why.

Tom: Yes. Just be careful, folks. A living trust, it can be the right tool for avoiding probate, but at the Olsen Law Group we focus on simple tools to avoid probate and people appreciate that.

Holley: So much. One of the things about a trust that I'm learning a lot more about is if you don't have a specific language in your trust in the state of Florida that allows you to receive your homestead rights, you're going to have a problem with the property appraiser's office, getting your homestead exemption, because they're looking for that language. We do that. It's customary in our trust, our living revokable trust, but it's one of those things I'm learning more and more. If you did your trust with someone else or outside the state and you decided to go ahead and buy that piece of Florida property and put it in the name of the trust, you might want to double check that.

Tom: When people go to apply for their homestead exemption and the property appraiser's office says, "Hey, you're missing the magic-- my words, magic language," when they call me and as soon as they start speaking those words, okay, I know what you need.

Holley: Yes, exactly.

Tom: Yes. We need to amend your trust. Add the magic language, go back down there. You're going to get your homestead exemption.

Holley: Exactly.

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