The Truth About Inheriting a Parent's Homestead Exemption in Florida

Many Florida homeowners use a Lady Bird deed (also known as an enhanced life estate deed) to pass their home to children or other loved ones while avoiding probate. A common question that comes up is:

“If my mother-in-law put me and my husband on the property with a Lady Bird deed and she had a homestead exemption, can we keep her low property taxes after she passes?”

Here’s the clear answer based on how Florida law works.

What Is the Florida Homestead Exemption?

The homestead exemption is a tax benefit available to Florida residents who make a property their primary residence. It caps the annual increase in the home’s assessed value for property tax purposes (the “Save Our Homes” cap) and provides an exemption that lowers the taxable value of the home. This results in significantly lower property taxes each year.

Can Children Inherit or Take Over a Parent’s Homestead Exemption?

No. A homestead exemption cannot be inherited by children or other non-spouse beneficiaries.

In the scenario where a mother-in-law places her daughter-in-law and son on the property as remainder beneficiaries via a Lady Bird deed, the property passes directly to them upon her death — similar to how a beneficiary on a bank account receives funds.

However, once ownership transfers, the existing homestead exemption and its favorable capped assessed value do not carry over. The county will reassess the property at its current fair market value.

The new owners must apply for their own homestead exemption if they plan to live there as their primary residence. If approved, they will receive the tax cap going forward, but it starts from the new, typically higher assessed value — not the lower value the original owner had.

The One Exception: Surviving Spouses

The only person who can continue or share the deceased person’s homestead exemption without a full reset is their spouse. If a surviving spouse stays in the home and maintains it as their primary residence, the exemption can usually continue without reassessment at full market value.

This benefit does not extend to children.

How a Lady Bird Deed Fits Into Estate Planning

A Lady Bird deed is a powerful probate-avoidance tool in Florida. It allows the owner to:

• Retain full control of the property during their lifetime (they can sell, mortgage, or even revoke the deed)

• Name beneficiaries who automatically receive the property upon death

• Transfer the home without going through probate court

This makes it popular for estate planning. However, while it successfully avoids probate, it does not preserve the parent’s homestead tax benefits for children.

Once the property passes through the Lady Bird deed, the beneficiaries own it outright and must handle the homestead application and new tax assessment themselves.

Key Takeaways for Florida Families

• A Lady Bird deed is excellent for avoiding probate and keeping the transfer simple.

• It does not allow children to inherit the parent’s lower homestead tax value.

• After the owner passes, expect the property to be reassessed at current market value.

• New owners should promptly notify the county property appraiser, record the death certificate if needed, and apply for their own homestead exemption if the home becomes their primary residence.

• Only a surviving spouse can typically continue the existing tax cap.

If you’re considering a Lady Bird deed for your own estate planning, or you’ve recently received property through one, it’s important to understand both the probate benefits and the tax realities. Proper planning can help you minimize surprises for your loved ones.

This information comes directly from our managing attorney Ashly Guernaccini if you have any questions on how the law applies to Lady Bird deeds and homestead exemptions. Schedule a Free consultation and our team will help you make the best decision for you and your families future.

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This article is for informational purposes only and is not legal or tax advice. Florida laws and county rules can have important nuances. Always consult a qualified Florida estate planning attorney and your local property appraiser for guidance specific to your situation.