How to Avoid Ancillary Probate in Florida
So how can out of state residents or foreigners who own real estate located in Florida avoid ancillary probate in Florida? There are really only four options, putting the property in joint ownership, listing it as a business entity owner, using an enhanced life estate deed, and placing the property in a trust.
Joint Ownership
The Florida real estate can be titled in joint names with one or more other owners with rights of survivorship. If you are married, then Florida recognizes a special type of joint ownership with rights of survivorship called “tenancy by the entirety.” If you are considering this option, please do not try to write your own deed. You need to consult with a Florida attorney to ensure that the deed is properly drafted and recorded, otherwise, you may inadvertently create a “tenancy in common” instead of a joint tenancy with rights of survivorship.
Enhanced Life Estate Deed
Florida has not passed a “transfer on death deed” or “beneficiary deed” law like a handful of other states. However, Florida common law does recognize a special type of life estate deed called an “Enhanced Life Estate Deed,” also known as a “Lady Bird Deed.” With this special type of life estate deed, the owner of the real estate, referred to in legalese as the “life tenant,” reserves the right to do whatever he or she wants with the real estate while alive, but after the death of the life tenant the real estate will pass outside of probate to the “beneficiaries” named in the deed, referred to in legalese as the “remaindermen.” For example, the life tenant can mortgage the real estate, or even sell it, without the permission of the remaindermen. But if the life tenant still owns the real estate when he or she dies, then the remaindermen will inherit it outside of the probate process. If you are considering this option, please do not try to write your own deed. You need to consult with a Florida attorney to ensure that the deed is properly drafted and recorded, otherwise, you may inadvertently create a “regular” life estate instead of an “enhanced” life estate.
Ownership in a Business Entity
The owner can transfer commercial or rental real estate located in Florida into a business entity such as a limited liability company or a corporation, which will convert the property from real estate into personal property. Note that while this may avoid ancillary probate in Florida, it may not prevent domiciliary probate in the owner’s home state of residence. If you are considering this option, please do not try to write your own deed. You need to consult with a Florida attorney to ensure that the deed is properly drafted and recorded.
Trust Ownership
The owner can title the Florida real estate in the name of a trust, such as a revocable living trust. If you are considering this option, please do not try to write your own deed. You need to consult with a Florida attorney to ensure that the deed is properly drafted and recorded.
What Should You Do?
Which one of these options will work the best for you? This will depend on many factors, including your use of the property (secondary home vs. residential rental property vs. commercial property); your creditor situation and that of your intended beneficiaries; your overall estate planning and asset protection goals; and your budget. Thus, you will need to sit down with your local estate planning attorney as well as a Florida estate planning attorney to discuss the pros and cons of each option and then decide which one makes the most sense in your situation.
