What is a '“lady bird deed”?

A “Lady Bird Deed",” also known as an enhanced life estate deed, is an estate planning tool that can assist seniors who foresee needing long-term care and want to avoid their home being subjected to probate or Medicaid estate recovery. It creates two ownership interests in a property: 1) a life estate that allows the senior to continue to live in their home during their lifetime and 2) a remainder interest, which automatically transfers the property to an appointed heir when the senior (who had the life estate) dies.

What does medicaid do for seniors?

Medicaid provides assistance and long-term care for low income individuals and families, but the thresholds for eligibility are quite low. If you have not addressed long-term care and Medicaid as part of your estate plan in the past, you might find yourself with assets that make you ineligible for Medicaid but aren’t enough to provide for your future care. You can’t simply transfer or give away those assets to family members to become eligible because Medicaid has a five-year “look-back” period to scrutinize your finances and any transactions made during this time period to determine if you qualify for the program.

How can “lady bird deeds” help with medicaid?

Lady Bird Deeds can be used to address estate planning needs without impacting your Medicaid eligibility. Because the deed does not fully transfer the property and allows the senior to continue to reside in the home, it isn’t considered a transfer that would trigger any penalty under Medicaid’s “look-back” period. This means that unlike gifting or selling the property to a family member, a Lady Bird Deed can be executed immediately prior to applying for Medicaid.

What can “lady bird deeds” help with probate?

Another benefit of using a Lady Bird Deed is that the property transfers immediately upon the death of the life estate owner. This means that the property goes directly to the grantee listed on the deed and bypasses probate.

Many of the eligibility and probate concerns discussed above can be properly addressed with an estate plan that takes into account future long-term care needs. However, we understand that sometimes life sneaks up on you or the unexpected happens. If you have questions about how a Lady Bird Deed or other estate planning tools can help protect you, please contact us.

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