Enhanced Life Estate Deeds

How Enhance Life Estate Deeds Work

First, the property owner signs a deed transferring real estate to a remaindermen (or remainder beneficiaries if multiple people will succeed the present owner.) Within the deed, certain language provides for the current property owner to sell, use, develop, or otherwise deal with the property during their lifetime.

What sets enhanced life estate deeds apart from ordinary life estate deeds, is the fact that the owner can mortgage, sell, or otherwise dispose of or deal with the property without the consent of the remaindermen.

Upon the death of the owner, the remainder beneficiaries file the death certificate with land records. In doing so, it serves as proof of the owner’s death and enables the property to transfer to the remaindermen while avoiding probate.

Benefits Of Enhanced Life Estate Deeds

• Owner retains control over property deeded to remaindermen.
• Owner retains the ability to derive economic gain from the property, including but not limited to renting the property, or selling it.
• Potential avoid triggering the Federal Gift Tax on the transfer during the owner’s lifetime.
• Avoid Probate upon the property owner’s death.
• Use of an enhanced life estate deed will not cause revaluation of the Florida Save Our Homes Exemption.
• Conveyance of property through an enhanced life estate deed is not considered to be a completed gift until the death of the grantor.
  • If, at the date of death the property is worth more than when it was acquired, it may provide the remaindermen a step-up basis for capital gains tax purposes.

Florida Documentary Stamp

If the property being transferred from the owner and the owner is the same person who retains a life interest in the property, the Florida Department of Revenue will not asses a full stamp tax. The deed will be assessed a minimum documentary stamp at the time the property is first conveyed. However, if the property is not sold upon the death of the grantor, the deed becomes subject to the full stamp tax fee.

Things to Watch For.

Enhanced life estate deeds should be drafted by a competent attorney. Should the deed contain a mistake, the enhanced life estate deed may not be satisfactory for title insurance companies or the State. In such an event, probate may be required. When forming an enhanced life estate deed, one should be mindful of the cost of Florida’s mortgage taxes to determine if such a deed is cost effective. Furthermore, enhanced life estate deeds require special consideration when a property is subject to a mortgage.