Your home is one of your most valuable assets, if not the most valuable asset you own. So, when it comes to planning your estate, it is important to give your home the consideration it deserves. In Florida, there are several different options for transferring ownership of your home outside of probate, and we cover some of the most popular options below.
When thinking about these options, it is important to keep in mind that your estate plan needs to be cohesive and it needs to reflect your unique family and financial circumstances. What works for someone else (even a close friend or family member) will not necessarily be the best option for you. As a result, before you decide on any one of these options (or any of the other options that are available), it is important that you take the time to thoroughly weigh your alternatives with the help of an experienced attorney.
5 Options for Addressing Your Home (or Other Real Property) in Your Estate Plan
1. Joint Tenancy with Right of Survivorship (JTWROS)
One option that works for some people is to own their real estate as “joint tenants with rights of survivorship.” As joint tenants with rights of survivorship (JTWROS), two co-owners share equal rights to the property during their respective lifetimes; and, at the time of one owner’s death, the other inherits full ownership of the property without the need to go through probate.
Of course, this option will not make sense for everyone. If you want to retain full ownership and exclusive rights to use your property during your lifetime, then you will need to choose a different alternative. Likewise, if you want to leave your share of your property to someone other than the current co-owner, then you will likely want to choose “tenancy in common” rather than JTWROS. Importantly, if you decide that you want to create a JTWROS, you must “expressly provide for the right of survivorship” in the deed under Florida law.
2. Tenancy by the Entirety
For married couples, there is also the option to own real estate as “tenants by the entirety.” This is similar to owning real property as JTWROS, and it allows full ownership of the couple’s home or other real property to automatically transfer to the surviving spouse at the time of one spouse’s death.
3. Enhanced Life Estate (or “Lady Bird Deed”)
A third option is to create an enhanced life estate, which is also commonly known as a “Lady Bird Deed.” A life estate creates a limited ownership interest for one individual during his or her lifetime (referred to as the “life tenant”), while another individual (the “remainderman”) immediately obtains the right to receive title to the property at the time of the life tenant’s death. With a traditional (non-enhanced) life estate, the life tenant is restricted from mortgaging or selling the property during his or her lifetime – an option which will make sense in some circumstances but not others.
With an enhanced life estate, these restrictions do not apply to the life tenant. The life tenant can sell or mortgage the property as he or she desires. Effectively, this gives the life tenant unfettered ownership of the property. And if the life tenant still owns the property at the time of his or her death, then the property automatically transfers to the remainderman.
The Lady Bird Deed is a good option, for example, in a situation where a parent wants to retain full rights to use, mortgage, and sell a property that the parent also intends to leave to his or her child. If the parent still owns the property at the time of his or her death, then the child (as the remainderman) will take title to the property outside of probate as intended. But, if the parent sells the property, then the proceeds of the sale will become part of the parent’s estate, and they can still be distributed to the child according to the other provisions of the parent’s estate plan.
4. Revocable Trust
A fourth option for dealing with real estate in your estate plan is to place the property into a revocable trust. With this option, the property is deeded to the trust, and this keeps the property out of probate. Revocable trusts also provide a significant amount of flexibility with regard to estate planning and financial management, and other assets can be placed into the trust as well (each subject to their own conditions and requirements). As a result, revocable trusts are common estate planning tools in Florida, and many individuals choose to use a revocable trust to plan the substantial majority of their estate.
5. Your Will
We will include your will in this list since it is technically an option; however, it will not be the best option in most circumstances. This is because planning for the distribution of real property in your will subjects the property to the probate process. It is generally best to avoid the time and cost associated with probate when possible, and this is especially true when dealing with real property.
Each of These Options Brings Up Multiple Factors to Consider
How do you choose the best option for you? Each option has its own unique benefits and limitations, and evaluating your alternatives requires careful consideration of multiple factors. In order to decide, you will need to answer several questions and you will need to try to do so with as much foresight as possible. Our attorneys can help. And if you are ready to get started with your estate plan, we encourage you to contact us for a confidential initial consultation.
Schedule an Initial Estate Planning Consultation in Jacksonville, FL
Do you have questions about estate planning in Florida? If so, contact our Jacksonville law offices to schedule a confidential initial consultation with one of our highly-experienced lawyers. You can reach us by phone at 904-288-4414, or send us your contact information online and we will be in touch with you shortly.