October 11, 2023

In Florida and a few other states, an “enhanced life estate deed” is known as a Lady Bird Deed. With a traditional life estate deed, the homeowner (the grantor) reserves the right to live on the property until their death. At that time, the property will go to the beneficiary (the grantee) named in the deed. In a traditional life estate, the grantor loses the right to sell or mortgage the home. A Lady Bird Deed allows the grantor to live on the property until their death, at which point it is transferred. When you plan your estate with your Millman Law Group attorney, you can determine whether a Lady Bird Deed is right for you. To start, consider the purpose and benefits of this unique deed. 

What Is The Purpose of a Lady Bird Deed?

The primary use of a Lady Bird Deed is to keep a property from going through probate after the grantor’s death. However, a Lady Bird Deed comes with a few other appealing benefits, including: 

• The power to sell or mortgage the property or cancel the deed
• The ability to qualify for Medicaid benefits
• The ability to retain the state homestead rights and property tax limitations
• The avoidance of federal gift tax
• The protection of the property from claims against the grantee 

How Does a Lady Bird Deed Impact Medicaid?

A Lady Bird Deed may be right for you if you, as the grantor, want to apply someday for Medicaid and long-term care. To qualify for Medicaid, your total asset value must be below a specific limit. Many states will allow you to keep your primary residence and still qualify.

However, if you use a traditional life estate deed to avoid probate in the five years before you apply to Medicaid, the value of your home will be an included asset that could disqualify you from benefits. This will not happen when you use a Lady Bird Deed because it will not be considered a transfer. 

When a Medicaid recipient dies, Medicaid can make a claim against the individual’s probate estate to recover benefits paid. A Lady Bird Deed bypasses probate, so the home is not part of the probate estate and is not available for Medicaid to go after. 

Lady Bird Deeds Compared to Other Estate Documents

If you are considering whether other estate planning documents are as helpful as Lady Bird Deeds, it’s worth comparing. Consider: 

• Lady Bird Deed vs. quitclaim deed: Quitclaim and warranty deeds transfer full ownership of the property to the grantee. However, neither allows the grantor to continue to live on the property or enjoy the other benefits of a Lady Bird deed. 
• Lady Bird Deed vs. Revocable Trusts: A revocable trust can accomplish the same goals as a Lady Bird Deed. If your primary home accounts for most of your net worth, it is more cost-effective to create a Lady Bird Deed. A revocable trust may be a better solution if you have a substantial amount of property of any type in addition to your home. 
• Lady Bird Deed vs. a Will: If the deed conflicts with a Will, the deed will have the final say. The only exception is if the grantor cancels the deed. 

You can discuss the details of your estate with your attorney to determine if a Lady Bird Deed is ultimately right for you. 

Estate Planning Made Easy With Millman Law Group

Millman Law Group, PLLC is rare because it’s one of the only law firms that offer life planning in South Florida. From life care planning to the preparation of detailed estate plans, Millman Law Group has committed to serving Floridian elderly communities in Boca Raton, Palm Beach County, Ocean Ridge, Hillsboro Beach, and many other areas since 2018. Our dedicated team also specializes in special needs Trusts and catering to any age demographic because we know for certain it’s never too early to start preparing you and your family for your future. For the latest news in estate planning and elder care law, follow us on Facebook, Twitter, Linked In, and Pinterest. You can also contact us at 561-463-6480.