How Can a Lady Bird Deed Help You?

It is best to illustrate the benefits of this type of estate planning with an example. Mary and David are 78 and 80 years of age. Mary and David are financially struggling and only have a home to leave to their children, Bill, Kevin, and Melissa, upon their death. Their home is worth about $100,000. David and Mary live off Social Security and will be applying for Medicaid benefits soon.

Mary and David want to keep their home until they pass but really want to leave an inheritance to their children. If they were to gift their home and within five years apply for Medicaid benefits, then Medicaid’s fraudulent transfer rule would apply and the home would be subject to a Medicaid lien.

In this case, Mary and David do have options to keep power of their homestead, and to pass property to their children for an inheritance. A Lady Bird Deed gives certain ownership rights to children but allows parents to keep the power to sell, convey, mortgage, lease, and otherwise dispose of the property. In addition, both parents will retain the rights to revoke, amend, divest, replace, or change the homestead.

Through a Lady Bird Deed, Mary and David can secure an inheritance for Bill, Kevin, and Melissa. In addition, this transfer avoids probate so Bill, Kevin, and Melissa will not have to probate their parent’s home.