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Lady Bird Deed

An Enhanced Life Estate Deed or a “Lady Bird Deed” is a deed which can assist in accomplishing two main estate planning objectives: (1) avoids probate by passing property to a beneficiary upon the death of the grantor; and (2) avoids the “gift” designation under any Medicaid Benefits. At Anderson Willingham Estate Planning, we can assist you in creating this deed for your loved ones. The following is to help you understand how a Lady Bird Deed conceptionally works:

For example, Mary and David are 78 and 80 years of age. Mary and David are financially struggling and only have a home to leave to their children, Bill, Kevin, and Melissa, upon their death. Their home is worth about $100,000. David and Mary live off social security and will be applying for Medicaid Benefits soon.

Mary and David want to keep their home until they pass but really want to leave an inheritance to their children. If they were to gift their home and within 5 years apply for Medicaid Benefits, then Medicaid’s fraudulent transfer rule would apply and the home would be subject to a Medicaid lien.

Mary and David do have an option to (1) keep power of their homestead, and (2) pass property to their children for an inheritance. A Lady Bird Deed gives certain ownership rights to children but allows parents to keep the power to sell, convey, mortgage, lease, and otherwise dispose of the property. In addition, both parents will retain the rights to revoke, amend, divest, replace, or change the homestead.

Through a Lady Bird Deed, Mary and David can secure an inheritance for Bill, Kevin, and Melissa. In addition, this transfer avoids probate so Bill, Kevin, and Melissa will not have to probate their parent’s home.  At Anderson Willingham Estate Planning, attorneys can assist you in creating the necessary documents to protect your love ones.