You Don’t Need a Revocable Living Trust

You’ve lost a loved one and the probate process is stressing you out.  Every time you file something, the judge says you need to file this piece before, that piece, and “have you found any of the 20 heirs of John Smith, your distant cousin who inherited 10% of your great-grandma’s property in 1968?”  Promise yourself you are not going to do this to your kids.   All your friends say you need a revocable trust.  I’m not going to keep you in suspense.  In more than 90% of my trust consultations, the answer is an unequivocal and enthusiastic NO YOU DON’T!

Do you and your spouse intend to leave everything to your adult children? If the answer is yes, then put “pay on death” designations on all of your bank, retirement and investment accounts, update the beneficiaries on your insurance, “Ladybird” your house, and leave a note that tells everybody who gets your household stuff.  That’s it.  You may now stop reading.  But in case you’re not convinced, I’ll quickly explain why.

Did you know Al Capone and O.J. Simpson had their primary home in Florida, why is that? In Florida, it is 100% protected from creditors under Article X of the Florida Constitution, better known as the Homestead Law.

What makes Florida the pink unicorn of the world is that this Homestead protection can be passed down to the next generation.  An “enhanced life estate” or “Ladybird” deed, gives your home directly to your chosen heirs when you die, but you still own it while you’re alive.  You can sell it, mortgage it, paint it, anything you want; but the moment all of the owners pass away, the “Grantees” of the Ladybird deed “Step into your shoes” as the owners of the house.  They take it, and the mortgage, and the paint, and anything else you may have done or failed to do to it.

Notice I said ALL of the owners have to pass away. Now, a Ladybird can be used by a single person, and you can leave it someone other than your kids, but for simplicity’s sake; let’s say you purchased your home during your marriage to your current (or deceased) spouse who is also the legal parent of all the children you still like.  Under Florida law you two own your house as “Tenants by the Entirety.”   That means you own your entire house, and your spouse owns your entire house.   Contrary to popular understanding, you do not each own half.   When one spouse dies, the other spouse still owns the entire house.  Your children don’t inherit until you are both gone, but then automatically get the house and everything in it. To avoid fighting over the silverware and jewelry, you should leave a nice note, so everyone knows who gets what.  Fancy formal versions of these notes are called “Wills,” perhaps you’ve heard of them.   Yours doesn’t need to be formal unless you anticipate a fight.

To recap: a ladybird deed gives your house and everything in it to your kids after you die. You can do anything you want with it while you’re alive, your spouse’s ownership is unaffected by your death, and your children inherit it with all the protections from your creditors like medical and nursing facility bills, credit card debts, unpaid parking tickets, everything. There is no paperwork for your heirs other than filing your death certificate in public records, and remember what wonderful parents they were lucky enough to have.