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Should you add a quitclaim deed to your Florida estate plan?

On Behalf of | Aug 11, 2021 | Estate Planning |

Estate planning is not an easy process. Not only do you have to think about what happens when you die, but you also have to learn about probate law. Taxes, creditor claims and even Medicaid could affect how much of your estate passes to your loved ones and heirs.

The bigger an asset is, the more likely it is for your family members to fight over it or your creditors to try to claim it. Your house is probably your biggest individual piece of property. Whether you want it to pass to your romantic partner who is not your spouse or your children, if they aren’t already on title, the house may have to pass through probate court.

Probating assets puts them at risk of creditor claims. The value of your house could also push the total value of your estate up high enough to force your executor to pay estate taxes. Will adding a quitclaim deed to your estate plan solve these issues?

What a quitclaim deed can do

When you execute a quitclaim deed as the owner of a property, you effectively end your ownership rights and pack them to the other party. Technically, the quitclaim deed does not have any authority until you hand it to the recipient and they record it with the county recorder’s office.

Executing a quitclaim deed could mean that your property passes to your loved one without going through probate. However, if you have not given them the deed before your death, you’re passing might invalidate the deed.

Even if the recipient already has the deed in their possession when you die, if they sell the property, the transfer via quitclaim deed could mean that they are liable for substantial capital gains taxes based on how much the property’s value has increased since you first took possession of it.

There are other solutions possible

While a standard quitclaim deed in your estate plan may not offer the protection you might hope for, there is a special variety of quitclaim deed only legal in a handful of states, including Florida. A lady bird deed will allow you to retain control over and tenancy in the property while technically making the eventual recipient the owner.

You could also change the ownership of the property to a trust that is part of your estate plan. You could even add the person you want to inherit the property to the title now and hold title jointly as tenants with rights of survivorship.

 

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