Florida has long held that property could be held in a life estate. That is, a deed can give fee simple ownership to a person, and upon the death of that person another grantee appointed in that deed is granted ownership. In legal parlance that person is the “remainder owner, or simply ‘remainderman’”. That deed is called a “life estate deed”, and that deed has been used forever in Florida to pass title from today’s owner to someone the owner wants to have the property after the lifetime of the owner.
That deed was, and is, an effective estate planning tool that in some cases makes probate, or a trust, unnecessary because at the death of the owner title to the property transfers automatically, as a result of that deed, without additional action by anybody. It’s done. Upon transfer of the property by life estate deed, the grantees of that deed, both the life tenant and the remainder owner, have vested interests in the property and must consent before it is conveyed.
But as it turns out the very fact that “it’s done” often became the problem. For instance, if two parents list their child (or children) as the remainder owners of their property, lots of life happens for the life tenants after the date of the deed appointing the children as remaindermen. One of the most disheartening is that both parents become unable to stay in the home but it can’t be sold for the proceeds to be used in their support until they both die unless the children agree. The same result would happen if the parent changed his mind about his intent to benefit that child after the parent’s death.
I for one got to the point that I began to view a life estate deed as a poor and badly informed effort on someone’s part to avoid probate. Too many things happened in the life of the owner for me to predict what the owner’s intent would remain until his death.
Enter the “Enhanced Life Estate Deed”, otherwise called the “Lady Bird Deed”. When many of us went to law school, that deed was as futuristic as a helicopter on Mars. Like any garden variety life estate deed, this deed conveys title, or retains title in the grantor, for his life and then grants the title to a remainder. But then it says language like…“except that the Life Tenant reserves to himself the power to sell the property during his lifetime, or to convey or mortgage or otherwise to deal in the property in his absolute discretion without consent of the remainderman”. [The language will normally be much more elaborate, but only because we lawyers need affirmation and because the subject is a lot more complicated than is presented here, the meaning of the language will be the above. In addition, don’t be fooled by the title. An enhanced life estate deed may simply be called by its common law name, the “life estate” deed. If it has the enhanced language its effect is far different than that of a simple life estate deed.]
I don’t know for sure, but I’ve been told that the “Lady Bird” moniker attached to this deed is a creation of Lyndon Johnson’s wife in trying to control his personal meanderings after she conveyed property she previously owned to Lyndon upon her death. The story was that she wanted to retain the ability to revoke all conveyances during her lifetime. While the story may be fable, it illustrates the effect of such a transfer.
Unlike a warranty deed or a special warranty deed that all Realtors and Lawyers are familiar with, there is no statute authorizing or prescribing a form for an enhanced life estate deed. This conveyance is a creature of conceptual extension of prior law without even much case law interpretation. But the device has been used enough now that the Florida Bar has adopted Uniform Title Standards to specifically authorize these deeds.
Like packing a parachute, flying an airplane, or mending a broken leg, composing an enhanced life estate deed is not something that should be done casually or by formula, especially when the subject is homestead property, where all conveyancing rules change. But when you see language in a deed like that quoted above, even if its title is merely “life estate deed”, understand that that deed carries very different rights to the life tenant from those traditionally inherent in a life estate deed.
Not all birds of a feather cover the same bird. Do be careful.
Author’s note: for Lawyers, an excellent treatment of Uniform Title Standard 6.10 is in an article by Benjamin Jepson in the Fall 2020 edition of Action Line, published by the Real Property, Probate, and Trust Law Section of the Florida Bar. Also, in these articles I follow the writer’s privilege adopted in some modern composition of using the writer’s gender in pronoun references within the article, for simplicity of expression.
Mike Chesser is President of Chesser & Barr, P.A. and Old South Land Title, Inc., both in Shalimar, Niceville and Crestview. He is Board Certified in Real Property and Local Government Law and can be reached at firstname.lastname@example.org. All articles are indexed and can be found online at www.chesserbarr.com/blog/.