Is a Lady Bird Deed in Your Future?

Is a Lady Bird Deed in Your Future?

An estate planning attorney uses many tools or strategies to create effective estate plans for their 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. The “Lady Bird Deed” is one tool used by a lawyer when their client’s estate includes real property.

Lady Bird Deed Defined

Also called an ‘enhanced life estate deed,’ Lady Bird Deeds transfers 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. The Lady Bird deed may be named after President Lyndon Johnson’s wife, who was called Lady Bird.

Uses for the Lady Bird Deed

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

  • Preserving Medicaid eligibility. Use of a Lady Bird deed 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.

Drawbacks to the Lady Bird Deed

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.

Find Out if a Lady Bird Deed Might Be Beneficial.

A Lady Bird deed is one of many estate planning tools available to Florida residents. 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 772-324-9050 or fill out our Contact Form. Our office is conveniently located in Palm City, Florida.