There are different options for leaving your Florida real estate to the person(s) you would like to receive your property during life or upon death. This article discusses six (6) different options:
Lifetime Gift: Gifting real property, outright, to your children or other loved one(s) during your lifetime may result in gift taxes being assessed. In addition, if you change your mind afterward, the person(s) to whom you gifted your real property will not be required to return it to you, and in fact, they may sell it at any time after you gift it without your consent. Regardless of the foregoing, you are required to report any gift that’s greater than the annual gift exclusion for the year the gift is made (currently $15,000.00 for 2019).
Joint Ownership: If you title real estate jointly with another person, the survivor of you will automatically become the owner(s) provided the correct survivorship language is included in the Deed; otherwise, the ownership will be considered to be tenants in common (meaning that if it’s 2 people on the Deed with no percentage of ownership specified, then each will own 50% and the survivor of the two will not receive the decedent’s share). Regardless, with joint ownership, you will no longer have complete control and will have to obtain that person’s permission to sell the property, and if and when the property is sold, you will no longer be entitled to 100% of the net sales proceeds. Also, if the property is not homestead property then owning real estate with another person can create creditor/lien issues if your joint or co-tenant is involved in litigation due to an accident, divorce, bankruptcy or other creditor claims. See Blog: The Dangers of Titling Property with Another Person .In addition, for Medicaid purposes, a period of ineligibility for benefits may be created should the conveyance be considered a gift.
Last Will and Testament: If you devise your Florida real property in your Last Will and Testament (known as a ‘devise’) to someone, whether they are related to you or not, that person will only be entitled to take title to the property after the probate process of your estate is completed. One disadvantage of leaving property that is titled in your name only to a beneficiary(ies), by Will only, is that the probate process will definitely be required after you die, and that process can be quite costly and time-consuming.
Revocable Living Trust: Funding your real property in your Trust during your lifetime allows you to continue enjoying, managing and controlling such property during your lifetime. No tax return is required for this type of Trust during your lifetime. The instructions you have provided in your Trust will determine who manages your property if you become disabled, and to whom, how and when your assets will be distributed following your death. One disadvantage to having your Trust own your real property is that refinancing your home may be more difficult since the lender may want the property to come out of the Trust prior to refinancing.
Life Estate: An example of this would be when you convey a particular real property to yourself for life as the “life tenant”, and upon your death the person(s) you have named as a “remainder person(s)”, automatically become(s) the owner(s) of the property upon your death. A problem with this type of life estate is that the remainder person(s)/Grantee(s) on the Deed will need to consent if you want to sell the house, and if the house is sold you would only be entitled to a small part of the net sales proceeds (calculated from the value of the life estate). Another problem with this type of life estate is that it may be considered a gift and therefore create a period of ineligibility for Medicaid benefits.
Enhanced Life Estate (also known as “Lady Bird Deed”): The main difference (and advantage) between this type of life estate and the type of life estate in the paragraph above, is that this type of life estate allows you to change your mind – meaning that if you decide you no longer want the other Grantee who is in the deed to receive the property, then you can revoke it without that Grantee’s consent. In addition, if you don’t revoke this type of life estate deed, then the Grantee(s) who appear in the Deed will automatically receive title to this property upon your death. However, similar to the problem with the other type of Life Estate Deed above, a possible problem here is that it may make it difficult to sell, or refinance the property due to issues that may be created with the lender or title insurance companies.
For our most recent updates “LIKE” us on Facebook: https://www.facebook.com/LawOfficeofIsabel/
Add Comment