What a Lady Bird Deed Does — and What It Doesn't — That Could Cost Your Family Everything

By Chuck Roulet, Esq. | Roulet Law Firm, P.A.

If you own a home in Florida, you have probably heard of a Lady Bird deed — or maybe you already have one. Your neighbor mentioned it. Your financial advisor brought it up. You may have even seen templates online that make it look like something you can do yourself on a Saturday afternoon.

And I understand the appeal. A Lady Bird deed avoids probate. It can help protect your home from Medicaid estate recovery in Florida. And it costs less than setting up a trust.

So what is the problem?

The problem is what most people are never told. A Lady Bird deed does a few things well — but it also comes with a set of hidden risks that can divide families, tie up property for years, and cost far more to fix than a trust would have cost to set up in the first place.

In this article, I am going to give you the full picture. What a Lady Bird deed does right, what it gets wrong, and why — for most families — a properly drafted trust is still the safer, smarter choice.

First, Let's Give Credit Where It's Due

A Lady Bird deed — formally called an enhanced life estate deed — is a legal tool that lets you transfer your home to your children or other beneficiaries at your death, without going through probate.

In Florida, probate is not cheap. Under Florida Statute §733.6171, attorneys are entitled to a statutory fee of 3% of the value of the estate — and the personal representative (executor) is entitled to the same. On a $400,000 home, that is potentially $24,000 in fees, split between the two. And that is before accounting for court costs, appraiser fees, and the months (sometimes years) it takes to get through the process.

So yes — avoiding probate is a legitimate goal. And a Lady Bird deed accomplishes that.

There is a second benefit specific to Florida. Unlike Minnesota and several other states, Florida does not have enhanced Medicaid estate recovery. That means the state can only recover nursing home costs paid by Medicaid from assets that pass through probate. Because a Lady Bird deed transfers your home outside of probate, and because Florida's homestead exemption provides additional protection, a properly structured Lady Bird deed can protect a Florida home from Medicaid recovery after your death.

So if you are asking "does a Lady Bird deed have real value?" — yes, it does. For a single person with a Florida home, modest assets, and adult children who all get along perfectly, it may be entirely adequate.

But here is where we need to have an honest conversation about what most families actually look like.

The Spouse Sign-Off Trap

Here is something most people — and even some attorneys — don't fully appreciate about Florida real property law.

Under Florida law, while it only takes one spouse to buy real estate, it takes both spouses to sell it or transfer it. This is true regardless of whose name is on the deed. The moment you are married, your spouse acquires a legal interest in your homestead property.

I saw this play out in a real case about a year ago. I had set up a trust for a single woman and prepared a deed to transfer her home into the trust. She chose not to record it right away. Then she got married. Even though she and her new husband had a prenuptial agreement, we still had to prepare a new deed — signed by both of them — before her home could be transferred into the trust.

Now apply that same principle to a Lady Bird deed with multiple beneficiaries.

When mom and dad pass away and the home transfers to the children, every child and their spouse must sign off on any future sale or transfer. If you have four children and they are all married, that is potentially eight signatures required before anything can happen with that property.

All it takes is one person who is uncooperative, going through their own difficult life circumstances, or simply disagrees about what to do — and the entire thing is held up.

Had the home been in a trust instead, the successor trustee — just one person — would have had the authority to manage and sell the property according to the trust's terms. No vote. No spouse signatures. No deadlock.

When a Beneficiary Is Going Through a Divorce

A Lady Bird deed transfers the home to whoever is named — period. It has no protective provisions. It cannot look ahead and say "if one of my children is in the middle of a divorce when I die, let's hold off."

If your child is going through a divorce at the time you pass away and your home transfers to them via a Lady Bird deed, their soon-to-be ex-spouse may have a legal interest in that inherited property. Before anything can be done with the home — before it can be sold, rented, or transferred — that divorce has to be resolved.

A trust with protective provisions can actually shield a child's entire inheritance — not just real estate — from divorce, lawsuits, and creditor claims. A Lady Bird deed cannot do that.

The Insurance Gap: A Risk Most People Have Never Considered

Here is one that almost nobody talks about — and it deserves serious attention.

When a property owner dies with a Lady Bird deed (or a Transfer on Death Deed in Minnesota), the property does not transfer automatically the moment they pass. The beneficiaries must take specific legal steps — typically filing a death certificate and an affidavit with the county — to complete the transfer. Until that paperwork is filed and processed, there is a gap period during which the title is in transition.

What happens if something goes wrong with the home during that gap period?

This exact question was answered by the United States Court of Appeals for the Eighth Circuit in Strope-Robinson v. State Farm Fire and Casualty Company (2021). A man had transferred his home to his niece using a Transfer on Death Deed in Minnesota. He passed away. Before the niece could complete the transfer at the county, his ex-wife intentionally set the house on fire.

State Farm denied the claim. Their argument: insurance is a personal contract between the insurance company and the named insured. The niece was not a named insured. The deceased owner no longer had an insurable interest in the property at the time of the fire. Nobody on either side of that equation had coverage.

Both the federal district court and the Eighth Circuit Court of Appeals agreed with State Farm.

Now, Florida is not in the Eighth Circuit. But insurance company lawyers are not limited to one federal circuit. I can tell you with certainty that insurance defense counsel are aware of this case, and it is not a stretch to imagine the same argument being made in Florida — particularly after a hurricane damages a home during that gap period before the transfer is complete.

Minnesota has tried to address this problem. Effective August 1, 2024, Minnesota Statute §507.072 now requires insurers to provide up to 30 days of temporary coverage to Transfer on Death Deed beneficiaries following the owner's death — but only if the property owner notified the insurance company of the deed and provided beneficiary contact information before they died. And the coverage still terminates when the policy expires or when the beneficiary obtains a new policy, whichever comes first.

In other words, even the Minnesota fix requires proactive action by the property owner while they are still alive. Most people with Lady Bird deeds have no idea this notification requirement exists. I am not aware of a comparable Florida statute addressing this gap, and until there is one, this remains an unknown risk for Florida families.

The Deceased Beneficiary Problem

Here is a scenario that sounds unlikely — until it happens to someone you know.

A family reached out to our office several months ago with an urgent problem. Their parents had used a Transfer on Death Deed in Minnesota naming all of the children, including one sibling who had died around the same time as the parents. The family had already found a buyer, agreed on a price, signed paperwork, and the new buyers had moved into the home.

When the title company submitted the deed to complete the sale to the new buyers, the county rejected it.

The reason: one of the beneficiaries named in the deed had died. The county required the family to open a formal probate proceeding for the deceased sibling's estate — to appoint an executor who could legally sign off on that sibling's share of the property.

The buyers had already moved in. There was no clear title. The family faced a situation that was going to require significant legal work and expense — all because one name on a deed had predeceased the completion of the transfer.

The same principle applies to Lady Bird deeds in Florida. If any beneficiary named on the deed passes away before or around the same time as the grantor — and before the transfer is completed — there is potential for exactly this kind of legal tangle.

A trust, by contrast, is governed by its own terms. A well-drafted trust anticipates what happens if a beneficiary predeceases the grantor. There is no equivalent automatic clarity in a Lady Bird deed.

The DIY Danger

I want to address something directly, because I know it is on people's minds. Lady Bird deed templates are available online. Some are free. Some cost a few dollars. The pitch is simple: "Why pay an attorney when you can do this yourself?"

Here is what those templates do not tell you.

Florida has specific requirements for how homestead property must be handled. A deed that does not correctly identify the property, fails to include the proper legal description, does not address Florida's homestead declaration requirements, or does not account for the marital interest of a spouse — may not be legally effective. You may believe your home is protected when it is not.

A DIY Lady Bird deed that is not properly drafted does not fail loudly. It fails quietly — often not discovered until the property owner is gone and the family is trying to sort things out. By then, the errors may be expensive or even impossible to fix without a court proceeding.

And even if the deed is technically valid, a DIY deed will not tell you about the insurance gap, the spouse sign-off requirement, the divorce exposure, the deceased beneficiary problem, or any of the other issues discussed in this article. You will not know what you do not know.

If You Own Property in More Than One State

A significant percentage of my Florida clients also own a home up north — in Minnesota, Wisconsin, Michigan, or another state. This is one of the most important points in this entire article.

A Lady Bird deed only works for Florida property. It does not avoid probate or provide any Medicaid protection for a home in another state. If you own property in two states and you use a Lady Bird deed for your Florida home, your northern property will very likely have to go through probate in that state — on top of any proceedings in Florida.

I have worked with dozens of clients in exactly this situation. Some of them came to me after a parent died and they discovered the hard way that the Lady Bird deed handled Florida — but nobody had planned for the house back up north.

A revocable trust can hold property in multiple states. One document. One successor trustee. One administration process after death — without multiple probate proceedings in multiple states. For clients with property in both Florida and Minnesota, I often recommend a revocable trust that covers both, and where nursing home protection is a concern for the northern property, a Medicaid Asset Protection Trust may be appropriate for that home as well.

What About the Surviving Spouse — The Florida Homestead Angle

Florida's homestead laws add another layer of complexity that a Lady Bird deed does not automatically resolve.

Florida's Constitution gives a surviving spouse a life estate interest in homestead property, with a vested remainder in the descendants — unless the spouse has specifically waived that right. This means that a Lady Bird deed on homestead property can interact with these constitutional provisions in ways that produce results the couple never intended.

A Texas case decided in 2023 — Wright v. Jones — illustrated what can happen when a joint Lady Bird deed does not precisely specify how the spouses' interests interact at the first death. In that case, a husband's half-interest passed directly to the named beneficiary when he died, leaving the surviving wife with only her own half — not the full control she expected. Texas is a community property state, so the precise legal mechanics differ in Florida. But the broader lesson is the same: courts are already grappling with what happens when Lady Bird deeds are not drafted with surgical precision, and Florida's homestead laws create their own version of that complexity.

A trust can address all of this explicitly. The trust document can specify exactly what happens at the first death, at the second death, and under a variety of circumstances that a Lady Bird deed simply cannot anticipate.

So Is a Trust Always the Right Answer?

Not necessarily. There are situations where a Lady Bird deed is a reasonable choice — particularly for a single person with a Florida home, limited other assets, and adult children with no complications on the horizon.

But for most families I sit down with, the picture is more complicated than that. There may be a second home. There may be children with difficult marriages or their own financial problems. There may be a spouse who needs to be protected at the first death. There may be a future nursing home concern.

A trust costs more to set up than a Lady Bird deed. That is simply true. But what I see over and over again is families spending many multiples of what a trust would have cost, trying to untangle a situation that a trust would have prevented.

With a trust:

Only the trustee needs to sign to sell or transfer property — not all of the children and their spouses.

A child's inheritance can be protected from divorce, lawsuits, and creditor claims with the right protective provisions.

Property in multiple states can be covered under one document.

The trust can specify exactly what happens under a wide range of circumstances.

There is no gap period and no insurance ambiguity at the time of transfer.

The Lady Bird deed is not a bad tool. It is just a limited one. And the families that get hurt by it are almost never the ones with uncomplicated situations. They are the ones who did not know what they did not know.

Is Your Home Actually Protected?

If you have a Lady Bird deed - or you are considering one - I encourage you to take a closer look before assuming your home and your family are fully protected.

Schedule Your Consultation

Call us today to schedule a consultation to discuss your own planning at either (941) 909-4644 for our Florida office, or at (763) 420-5087 for our Minnetonka, Minnesota office. Or you can fill out the contact form on this page and a member of our team will reach out to you to schedule your consultation.

If you would like to discover more, here are two additional resources for you.

Join us in my upcoming masterclass where I will reveal strategies to help you avoid probate, save on taxes, protect the money you leave for your kids in the event they get divorced and much more. Click here to register.

If you would like to discover how to protect your home and life savings from nursing home and long-term care costs, download your copy of "Save Our Home". Click here to download your copy.

This article is for general educational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. Laws vary by state and individual circumstances differ. Please consult a licensed attorney before making any estate planning decisions.

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