26 Aug What is a Lady Bird Deed?
Have you ever heard of a Lady Bird Deed?
The unique name came into usage after President Lyndon Johnson’s estate transferred property upon his death to his wife, ‘Lady Bird’ Johnson.
Also sometimes called an enhanced life estate deed, it allows the transfer of property at death without the need for probate. Assets can then be transferred to individuals(s) or a trust.
While ‘regular’ life estate deeds take control away from the owner during their lifetime — giving beneficiaries immediate rights — an ‘enhanced’ Lady Bird Deed allows the owner to maintain their rights to the property. This includes the right to sell, gift, mortgage, lease, etc. The ownership transfer does not take place until the owner has passed.
Those wishing to spare their loved ones the difficulty and time commitment of probate court may benefit from a Lady Bird Deed. Additionally, many look into property transfers in instances where Medicaid is involved. Medicaid requires that individuals first use their own assets to pay for care before applying for benefits. Many people falsely believe they can give away their property and assets to family members in order to better qualify for Medicaid eligibility. However, because of a five-year “look back” period, any assets or property held during this time period can be used for qualifying purposes.
A Lady Bird Deed technically does not count as a transfer because you remain owner until death. While property can be seized to pay back Medicaid after death, your property could potentially be spared if you transfer it through Lady Bird Deed. This type of deed can also make quite a positive difference in taxes owed for you and your beneficiaries.
While this can be a complex issue, an experienced estate planning attorney can walk you through the best options for your circumstances, while crafting the correct deed to meet your goals.