Claudia Alta Taylor “Lady Bird” Johnson served as First Lady of the United States from 1963 to 1969 as the wife of President Lyndon B. Johnson. Her biggest impact as first lady was to spearhead the effort to clean up and beautify our nation’s roads and highways. Interestingly, her name is also connected to a very powerful probate avoidance tool, the “Lady Bird Deed.” The ironic thing is that Lady Bird Johnson herself had nothing to do with their creation. Rather, a Florida attorney who has been called “the father of the Lady Bird Deed”, Jerome Solkoff, used her name as a fictional persona in his educational materials which explained the benefits of these deeds. Lady Bird Johnson died in 2007, but the deeds that she unwittingly (and probably unknowingly) helped to name continue to live on.
A Lady Bird Deed is an effective and inexpensive way to avoid probate for a real estate asset while maintaining nearly all of the benefits of standard “fee simple” ownership. It is sometimes called a “transfer on death deed” or an “enhanced life estate deed.”
Frequently a decedent’s main asset of any real value is his or her home. But unfortunately, usually that asset must go through lengthy and expensive probate proceedings. That is because by the time a decedent dies, it is too late for him or her to “plan” his or her estate. The heirs are left to do the work and pay the attorneys and accountants to probate and account for the estate.
Fortunately, the living can still plan their estate. For people whose main asset is their home, or for those who have already arranged for the transfer of their other assets (i.e., via joint ownership or transfer on death designations), a Lady Bird Deed may be in order.
What is it? It is a simple warranty deed recorded in the public records whereby the owner states on the face of the deed that he or she is the owner of, and shall maintain full control of, the property for the span of his or her life. He or she can sell the property (at fair market value) or mortgage the property and keep all of the proceeds generated thereby. It also states that he or she can improve the property or even let it fall into disrepair. He or she can do all of this without needing anyone else’s signature. And if the property is homesteaded, there is no effect on the homestead tax exemption or Florida constitutional homestead protection from creditors. And only nominal documentary stamps (all of seventy cents) are due when he or she signs the enhanced life estate deed, since there is no change in the beneficial ownership of the property.
The deed goes on to state that upon the owner’s death, the property automatically goes to whomever is named in the deed. Those named parties are called “remaindermen.” (The remainermen are usually the decedent’s children). If the owner wishes to disinherit one or more of the remaindermen during his or her life, he or she can do so simply by recording a new Lady Bird Deed. After the owner dies, the remaindermen just record the decedant’s death certificate in the public records. Then the property automatically belongs to the remaindermen. They can then keep the property or sell it. That’s it. No expensive and lengthy probate. No other documents to keep track of. No trust hassles or costs. And their resulting ownership is fully insurable by a title company.