What is a LadyBird Deed & How is it Useful?
A Lady Bird Deed is a specialized deed that allows a person to transfer their property while maintaining certain ownership rights during their life. When the owner of the property transferred via a Lady Bird Deed dies, that person’s rights to the property end and full ownership of the property automatically transfers to the person or persons to whom the property was deeded.
The reason a Lady Bird Deed is helpful is twofold:
First, in the case where a person’s property and assets consist mainly of their home, their family and loved ones can likely avoid probate by using a Lady Bird Deed.
Upon their death, the person or people to whom they would leave their home in a will automatically become the owner of the home without having to probate the estate. This can save their loved ones thousands of dollars in court costs and legal expenses.
Second, the Lady Bird Deed is helpful to protect the homestead from Medicaid recovery after the recipient of Medicaid benefits has died.
The State of Texas allows a person who owns a home to qualify for Medicaid benefits and retain their homestead. After the death of a homeowner who has received Medicaid benefits, the State will place a lien on their real property (real estate) to collect the total amount of benefits expended by the State on behalf of the deceased homeowner. A Lady Bird Deed can be used to pass a home to the loved ones of a person who has received Medicaid Benefits and avoid that Medicaid lien and the Medicaid Estate Recovery Program (MERP).
The State of Texas specifically allows a person to avoid having their home sold to reimburse the State for Medicaid funds expended on their behalf by authorizing the use of a Lady Bird Deed to avoid the inclusion of this particular asset in their estate after their death.
