Can You Sell a Florida House Held Under a Life Estate Deed?
If you are looking to keep your home within the family after you die, a life estate or enhanced life estate (or Lady Bird) deed may be the answer. Such deeds can transfer property outside of the normal Florida probate process, but they also carry certain risks and restrictions. The Tampa estate planning attorneys at Bleakley Bavol Denman & Grace can review your situation and advise you on the best course of action for you and your family.
Life Estate vs. Lady Bird Deeds
Florida is one of just a few states that permit enhanced life estate deeds, commonly known as “Lady Bird Deeds.” A Lady Bird Deed is an alternative to a traditional life estate deed. With a traditional life estate deed, you divide ownership of a piece of real property between a life estate holder and one or more remaindermen. Upon your death, the property transfers to the remaindermen by operation of law – outside of probate. Although you retain many of the rights typically associated with ownership, such as the right to live in or rent out the property, you surrender the right to sell or mortgage the property during your life and become liable for waste.
On the other hand, under a Lady Bird Deed, you name yourself as the life estate holder and reserve the right to sell, mortgage, or otherwise dispose of the property as you see fit. The remaindermen have no vested property rights under a Lady Bird Deed until you die. In other words, you continue to own and live in the house as you always have, and upon your death, the property transfers to the remaindermen you have named in the deed. Thus, a Lady Bird Deed is an effective and simple probate avoidance mechanism that allows you to keep the rights typically associated with land ownership.
Florida Appeals Court: Wife May Not Keep 78% of Sale Proceeds
A recent decision from the Florida Fourth District Court of Appeals, Varano v. Varano, demonstrates how a traditional life estate deed can restrict your options when it comes to selling your house during your lifetime. In this case, a husband and wife signed a traditional life estate deed, reserving for themselves a life tenancy in the property. Each spouse had adult children from prior relationships. Under the terms of the life estate deed, a one-half remainder interest belonged to the wife’s children, and the other one-half interest belonged to a trust the husband established for the benefit of one of his sons.
After the husband died, the wife continued to live in the house, as she was still a life tenant. She decided to sell the property. Her late husband’s son–the beneficiary of his trust–objected to the sale. This led to litigation. The parties reached a settlement, which gave the wife 50 percent of the sale proceeds, the trust 22 percent, and the remaining 28 percent held in escrow pending further agreement or judicial determination as to entitlement to this share.
The wife also claimed the right to this 28 percent. She argued that her children, as one-half remaindermen, consented to this arrangement, and that she consented as successor trustee of her late husband’s trust. The Fourth District noted that in the absence of a Lady Bird Deed, she was a mere life tenant with no legal right to sell property. In her purported capacity as trustee of her husband’s trust, she lacked authority to bind the trust to the sales contract because it constituted a conflict of interest. As such, the Fourth District upheld the trial court’s determination that she was not entitled to the 28 percent in escrow.
Contact a Tampa Estate Litigation Attorney Today
Ideally, estate planning can prevent litigation from arising among family members after a loved one’s death. Unfortunately, disputes can still arise. This is where it helps to work with an experienced Tampa estate litigation attorney. Contact Bleakley Bavol Denman & Grace today to schedule an initial consultation.
Source:
scholar.google.com/scholar_case?case=9336785710511676775
