Understanding the Transfer on Death Deed (TODD) or in Florida Named Lady Bird Deed
When it comes to estate planning, many people focus on writing a will, naming beneficiaries, or creating a trust. However, transferring real estate after death often raises additional concerns—especially probate delays, court involvement, and added costs. In Florida, two commonly used tools help address these issues: the Transfer on Death Deed (TODD) and what is commonly known as the Lady Bird deed.
Both options provide a straightforward and cost-effective way to pass real estate directly to a chosen beneficiary without probate. For many families, this also simplifies what happens next, including the ability to sell inherited property for cash in Florida once ownership transfers.
This article explains how TODDs and Lady Bird deeds work, their benefits, their limitations, and what Florida property owners and beneficiaries should know.
What is a Transfer on Death Deed?
Friendly Definition
A Transfer on Death Deed (TODD) in Florida allows a property owner to name a beneficiary who automatically receives the property upon the owner’s death, without probate. The owner retains full control during their lifetime, including the right to sell, mortgage, or revoke the deed.
A Transfer on Death Deed (TODD) is a legal document that allows a property owner to name a beneficiary who will automatically inherit real estate upon the owner’s death. Unlike traditional transfers, a TODD does not require the property to go through probate court, helping heirs avoid delays and administrative complications.
The TODD works similarly to a payable-on-death (POD) designation used for bank accounts, a concept commonly used in broader estate planning tools for real estate. Once the owner passes away, the property transfers directly to the named beneficiary without court involvement.
This structure is especially helpful for beneficiaries who plan on selling inherited real estate in Florida rather than managing an additional property long-term.
How Does a Transfer on Death Deed Work?
Creating and using a TODD is relatively simple when done correctly:
1. Draft the Deed: The property owner (grantor) prepares a TODD clearly stating their intent to transfer the property to a specific beneficiary upon death. The deed must include a full legal description of the property and accurate beneficiary information.
2. Record the Deed: The TODD must be recorded with the county clerk in the county where the property is located. If it is not recorded, it is not legally effective.
3. Retain Full Control: After recording the TODD, the grantor retains full ownership and control of the property during their lifetime. They can live on the property, sell it, mortgage it, or even revoke the TODD if they change their mind. The beneficiary has no ownership rights until the grantor’s death.
4. Automatic Transfer at Death: When the grantor passes away, the property transfers automatically to the beneficiary. After filing the required affidavit and documents, many beneficiaries choose to sell inherited homes locally, including inherited homes in Pensacola, Florida, rather than take on ongoing expenses and upkeep.
Advantages of a Transfer on Death Deed or Lady Bird Deed
A TODD or Lady Bird deed offers several benefits for Florida property owners and their beneficiaries:
- Avoids probate and court delays
- Reduces legal and administrative costs
- Allows immediate transfer of ownership
- Preserves full control for the owner during their lifetime
- Simplifies the process for beneficiaries who plan to sell inherited property
For heirs, this often means fewer legal obstacles and a clearer path forward.
Potential Drawbacks and Considerations
There are several compelling reasons why a TODD or in Florida named Lady Bird deed might be an ideal choice for transferring real estate and enabling quick cash sales:
Limited to Real Estate: A Transfer on Death Deed (TODD) applies only to real estate. It does not cover bank accounts, investment accounts, or personal property. Other estate planning tools are required to transfer those assets.
Potential for Conflicts: A TODD may lead to disputes among heirs if its terms conflict with other estate planning documents or family expectations, particularly when only one beneficiary is named.
Creditor Claims: While a TODD helps avoid probate, it does not protect the property from valid creditor claims. If debts exist at the time of death, creditors may still pursue the property, potentially forcing a sale.
Complexity in Multi-State Ownership: If a grantor owns property in more than one state, a separate TODD may be required for each state, which can add complexity to the estate planning process.
How to Create a Transfer on Death Deed
Creating a TODD or Lady Bird deed requires careful attention to legal requirements:
Step 1 – Consult With an Attorney: While not required, legal guidance can help ensure the deed is properly prepared.
Step 2 – Prepare the Deed Correctly: The deed must include the grantor’s information, a legal property description, beneficiary details, and clear intent language.
Step 3 – Sign, Notarize, and Record: The deed must be signed, notarized, and recorded with the county clerk to be valid.
Step 4 – Revoke or Amend the Deed: If you change your mind about the beneficiary or decide to sell the property, you can revoke or amend the TODD at any time before your death.
Florida-Specific Rules for TODDs and Lady Bird Deeds
Florida recognizes enhanced life estate deeds—commonly called Lady Bird deeds—as a valid estate-planning method. The Florida Bar confirms that Florida law recognizes Lady Bird deeds when they are properly drafted and recorded.
In Florida, these deeds must include:
A complete legal description of the property
Identification of the life tenant and remainder beneficiaries
Language allowing the life tenant to sell or mortgage the property
Tax Considerations
Lady Bird deeds generally do not trigger gift tax and often allow beneficiaries to receive a step-up in basis, which can reduce capital gains taxes if the property is sold.
Avoiding Common Mistakes
While a TODD or Lady Bird deed can be a powerful tool in estate planning, it’s important to be aware of common mistakes:
Failure to Record the Deed: The most critical step in creating a Transfer on Death Deed (TODD) or Lady Bird deed is recording it with the county clerk. An unrecorded deed is not legally binding and will not transfer ownership.
Not Updating the Deed: A TODD or Lady Bird deed should be updated if circumstances change. Failing to update the deed can lead to unintended consequences for beneficiaries.
Ignoring Other Estate Planning Tools: A TODD or Lady Bird deed should be used alongside other estate planning tools to ensure a complete and well-coordinated plan.
Frequently Asked Questions
Question 1
Can a Transfer on Death Deed be revoked in Florida?
Answer:
Yes. A Transfer on Death Deed (TODD) or Florida Lady Bird deed can be revoked or changed at any time during the property owner’s lifetime, as long as the owner is legally competent. The updated deed must be properly recorded with the county clerk to be effective.
Question 2
Does a Lady Bird deed avoid probate in Florida?
Answer:
Yes. A properly drafted and recorded Lady Bird deed allows real estate to transfer directly to the named beneficiary upon the owner’s death without going through probate court in Florida.
Question 3
Can the property owner sell or mortgage the property after creating a TODD or Lady Bird deed?
Answer:
Yes. The property owner retains full control during their lifetime, including the right to sell, refinance, mortgage, or lease the property. The beneficiary has no ownership rights until the owner’s death.
Question 4
Do beneficiaries owe taxes when property transfers through a Lady Bird deed?
Answer:
Lady Bird deeds generally do not trigger gift tax at the time the deed is created. In many cases, beneficiaries receive a step-up in basis, which may reduce capital gains taxes if the property is later sold. Tax situations vary, so professional guidance is recommended.
Question 5
What happens if a TODD or Lady Bird deed is not recorded in Florida?
Answer:
If the deed is not recorded with the county clerk, it is not legally effective. An unrecorded TODD or Lady Bird deed will not transfer ownership, and the property may still be subject to probate.
Takeaway: Is a Transfer on Death Deed or Lady Bird Deed Right for You?
A Transfer on Death Deed (TODD) or Florida Lady Bird deed can provide a clear and efficient way to transfer real estate without probate while maintaining full ownership control during life. For beneficiaries, this often results in a smoother transition and the option to sell inherited property without unnecessary delays.
As with any estate-planning decision, individual circumstances matter. Consulting with a qualified estate-planning attorney can help determine whether a TODD or Lady Bird deed aligns with your goals and provides clarity for those involved.
