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The main disadvantage of a lady bird deed in Florida is its limited protection against creditors during the owners lifetime. Additionally, title insurance or financing may be more challenging to secure. It also requires careful planning to avoid unintended Medicaid consequences or disputes among beneficiaries.
The lady bird deed results in no gift tax, no documentary stamp tax, and it preserves your step-up in basis to eliminate capital gain tax. However, it does not protect against the estate tax.
A Florida Lady Bird deed, formally known as an Enhanced Life Estate Deed, is designed to allow property owners in Florida to transfer property to others automatically upon their death while maintaining use, control and ownership while alive.
U.S. federal law allows states to claim a persons assets after their death to recover Medicaid costs for long-term care. In states where lady bird deeds are available, the property doesnt count as part of your estate and isnt subject to the Medicaid estate recovery plan, or MERP. Medicaid.gov. Estate Recovery.
There are four (4) major benefits of a lady bird deed in Florida: 1) probate avoidance; 2) preserve homestead benefits; 3) preserve Medicaid eligibility; and 4) step-up in basis at your death.

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Potential Drawbacks of Lady Bird Deeds Medicaid Eligibility Concerns. Limited Flexibility. Risk of Unintended Consequences. Potential for Increased Property Taxes. Title Issues. Limited Asset Protection. Superior Alternatives to Lady Bird Deeds.
No matter who is designated in the will to receive the property, the Lady Bird Deed will take precedence over any devise made in a will.

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