Is a Lady Bird Deed in Your Future?

Estate Planning, Lady Bird Deed
Lady Bird Deed is a tool to exclude real property value from Medicaid eligibility and Medicaid reimbursement considerations.

A Lady Bird Deed is one tool used by a lawyer when the client’s estate includes real property. An estate planning attorney uses many tools or strategies to create effective estate plans for clients. An estate plan, or life care plan, covers many aspects of a person’s life including what type of end-of-life treatment they want, who will make medical or financial decisions for them if necessary, and how to dispose of property after death.

What is a Lady Bird Deed?

Also called an “enhanced life estate deed”, Lady Bird Deeds transfer real property to one or more beneficiaries after the owner of the property has passed away. This type of deed is used in a handful of states, including Florida, Michigan, and Texas.

Benefits of a Lady Bird Deed

Enhanced life estate deeds are used for several reasons, including:

Preserving Medicaid eligibility.

It can allow Florida homestead property to remain exempt from consideration during the Medicaid eligibility process. In addition, estates sometimes face claims for reimbursement from Medicaid. Because this deed allows property to pass to beneficiaries without going through probate, there’s little to no risk that it will be used to pay this type of claim.

Preserving assets for your family.

Since the property will not be sold to repay the former owner’s Medicaid benefits, it passes to the heirs. Property passes automatically without going through probate.

Owner maintains control of the property.

Unlike instruments like the life estate deed (as opposed to an enhanced life estate deed), the owner of the property retains control over the property until his or her death.

Disadvantages

Almost any legal process is not ‘one-size-fits-all.’ Some of the drawbacks to using an enhanced life estate deed may include:

Property Passing to Minor Beneficiaries.

If a minor is named as beneficiary, the minor may need a guardian to manage the property until attaining adulthood. Another option is to name a trust as beneficiary of the Lady Bird Deed and name the minor as the beneficiary of the trust.

Property passing to multiple beneficiaries.

One alternative option is to form a trust, name the trust as beneficiary of the enhanced life estate deed, and name multiple beneficiaries in the trust. This is just one aspect of the Lady Bird deed that you may discuss with your lawyer.

How Does It Work?

Florida is one of the states that allows Lady Bird Deeds. Under the Lady Bird deed, an individual acquires an advanced “life estate” stake in real property while designating the “remainder” interest to another party upon their eventual passing.

The holder of the “life estate” maintains exclusive rights over the property throughout their lifetime. This unique arrangement permits them to sell the property, utilize it, or make decisions regarding the property, free from the constraints of approval from the remainder beneficiaries.

Interestingly, the remainder beneficiaries possess no inherent rights or authority concerning the property. While the life estate holder is alive, the beneficiaries hold no sway over property transactions.
If the Lady Bird deed stays valid and the person who owns the property doesn’t sell it while they’re alive, the property will automatically go to someone else when they pass away. This way, there’s no need to go through probate. Avoiding probate is thus one of the major benefits of a ladybird deed and it makes this a powerful estate planning tool.

Looking to Establish a Lady Bird Deed in Florida?

As a Florida attorney board certified in Wills, Trusts & Estates, Attorney John Mangan can evaluate your needs and help you develop the right estate plan. To schedule an appointment, call us at 772-218-0480 or fill out our Contact Form. Our office is conveniently located in Palm City, Florida.

Law Offices of John Mangan, PA
Palm City – Stuart, FL
CALL: 1 (772) 218-0480

Do you question the need for attorney guidance with so many online resources? Because laws and regulations are complex, and because every person has a lot at risk, more people than ever are seeking professional guidance from an experienced, knowledgeable source. That helps explain the rapid growth of our firm. Whether you happened upon this website by accident or are one of the many referrals we receive from a nearly 15-year collection of satisfied clients, our staff can provide customized estate planning guidance for you. Call us. Our number: 1 (772) 218-0480

Written by: John Mangan, JD, MBA