Lady Bird Deed and Your Mortgage in Florida: Passing the Home Without Probate or Losing Control

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A lady bird deed mortgage Florida owners hold is unaffected by: the enhanced life estate deed transfers the home at death to named beneficiaries while the owner keeps full control, the homestead cap and the right to sell or refinance.

It is Florida's probate-avoidance tool for a home. Our guide to inherited property with a mortgage in Florida covers what the beneficiaries face.

What it is

An enhanced life estate deed: the owner keeps a life estate with the power to sell, mortgage or revoke without the remainder beneficiaries' consent.

At death, title passes to the beneficiaries by recording a death certificate.

Recognised in Florida and a handful of other states.

The Florida Bar consumer materials describe it.

An attorney drafts it; the county records it.

Compared to a regular life estate

A traditional life estate deed gives the remainder beneficiaries a vested interest; the owner cannot sell or mortgage without them.

See our guide to trusts and mortgages in Florida.

The lady bird version keeps that power with the owner.

Beneficiaries have an expectancy, not a right, until death.

That difference is the point.

The existing mortgage

Recording a lady bird deed does not trigger the due-on-sale clause; the owner keeps the property.

The Garn-St Germain Act exempts transfers on death to relatives in any case.

Payments continue as before.

The lender need not be notified, though some owners do.

Nothing changes while the owner lives.

Refinancing with one in place

The owner refinances alone; beneficiaries do not sign.

See our guide to rate-and-term refinancing in Florida.

Some lenders and title companies ask for the deed and confirm the retained powers.

A well-drafted deed states them clearly.

A poorly drafted one causes delay.

Selling with one in place

The owner sells alone; the deed's retained power covers it.

See our guide to what happens at closing in Florida.

The buyer's title company reviews the deed.

The beneficiaries' expectancy ends with the sale.

No consent needed.

Homestead and the cap

The owner keeps homestead and the Save Our Homes cap; nothing transfers during life.

See our guide to Save Our Homes in Florida.

At death, beneficiaries who move in file their own homestead.

A surviving spouse beneficiary keeps the cap.

Other heirs start fresh.

At death

Beneficiaries record the death certificate and an affidavit.

Title is theirs without probate.

See our guide to the mortgage after the death of a spouse in Florida.

The mortgage continues; beneficiaries are successors in interest.

They assume, refinance, sell or keep paying.

Beneficiaries and the mortgage

Family beneficiaries can assume most loans without requalifying under federal servicing rules.

See our guide to assumable mortgages in Florida.

A reverse mortgage becomes due; beneficiaries repay or sell.

See our guide to reverse mortgages and heirs in Florida.

Plan for the loan when naming beneficiaries.

Medicaid

The home is not counted as transferred for Medicaid purposes during life.

Florida's estate recovery reaches probate assets; a lady bird deed keeps the home out of probate.

Elder law attorneys use it for this reason.

Rules change; verify current policy.

It is not a substitute for planning.

Taxes

Beneficiaries receive a stepped-up basis at death, as with any inheritance.

See our guide to capital gains on a primary residence in Florida.

No gift tax during life; nothing was given.

No doc stamps on the recording in most cases.

A tax adviser confirms.

Multiple beneficiaries

Several children take as tenants in common.

See our guide to tenants in common versus joint tenancy in Florida.

Disagreements about selling follow.

Name a single beneficiary or a trust to avoid it.

Or provide for a sale in the estate plan.

Compared to a trust

A revocable trust avoids probate for all assets; a lady bird deed handles the home only.

See our guide to trusts and mortgages in Florida.

The deed is cheaper and simpler.

The trust handles complex families and incapacity.

Many owners use both.

Compared to adding a child to title

Adding a child as joint owner exposes the home to the child's creditors and divorce and makes a taxable gift.

The lady bird deed avoids all of it.

See our guide to buying a home for a parent in Florida.

The child gets nothing until death.

That is the safer structure.

Title insurance

Buyers from beneficiaries get a normal title search and policy.

See our guide to title insurance in Florida.

A properly drafted and recorded deed clears easily.

Homemade deeds cause title objections.

Use an attorney.

Revoking or changing

The owner records a new deed at any time.

No beneficiary consent.

Marriage, divorce or a falling-out prompts changes.

See our guide to divorce and your mortgage in Florida.

Review it with every life event.

A worked example

A widowed owner with a mortgage records a lady bird deed naming two children.

She refinances two years later without their involvement.

At her death, the children record the certificate and own the home outright.

They assume the loan as successors and sell a year later.

No probate, no gift, no lost cap during her life.

Cost

An attorney's fee for drafting and recording, modest by estate planning standards.

Recording fees at the county.

No doc stamps in most cases because no consideration passes.

Cheaper than probate by a wide margin.

Cheaper than a trust for a single asset.

Where to start

Ask an estate planning attorney whether a lady bird deed fits your family and your loan.

Keep the mortgage and the homestead exactly as they are.

Then start a conversation if a refinance is in the plan; the deed will not get in the way.