Lately, our firm has received a lot of questions about Lady Bird Deeds. Questions ranging from What are they? How do they work? Etc. Below is the basic breakdown of what a Lady Bird Deed is…
Where Does the Name Lady Bird Come From?Contrary to popular belief, according to Gerry W. Beyer and Kerri M. Griffin, the name does NOT originate from Lady Bird Johnson. Rather, a Florida attorney, named Jerome Ira Solkoff used the names Lady Bird, Lucie and Lynda in elder law books he had written and lecture materials he used describing revocable life estates and there the name stuck.
Ok, so What Is It?A Lady Bird Deed is a transfer of property to another with a reservation of a life estate. Meaning a person can transfer property and retain ownership in that property until death, at which point it will then transfer to the other.
What Makes a Lady Bird Deed Different from Other Transfer on Death Deeds?There are other deeds that have reserved life estates such as the Lady Bird. But what sets the Lady Bird Deed apart is that the person transferring the property (known as the grantor) gets to keep complete control over that property. Meaning the grantor can lease, mortgage, or sell the property and is entitled to all rents, royalties, profits and income that derives from the property. Also, the grantor can change or cancel the deed at any time.
Lady Bird Deeds and Medicaid/MERPSay you want to apply for Medicaid benefits, and you have transferred property within 60 months prior to a loved one, for less than what their fair market value is (i.e. gifting your house to your children) Medicaid will then apply a transfer penalty against you. For example - you give your child your house for $10,000 but the house is actually worth $100,000 fair market value, Medicaid penalizes you by delaying in months your eligibility date. But, if you use a Lady Bird Deed, you still have full control over that property, and it does not activate this "transfer penalty."
The same is true for the Medicaid Estate Recovery Program (MERP). With MERP the state is to file a claim against a deceased's estate if they were 55 or over and received long-term health care benefits when they were living. Again, a Lady Bird Deed will protect the property transferred because it is not transferred through probate (the transfer is automatic at death such as life insurance) and is therefore not subject to a MERP claim.
Do I Need a Lady Bird Deed?Good Question! This is a dense amount of information provided in only a few short paragraphs. If you or your loved ones are wondering if a Lady Bird Deed is right for you, give our office a call and let one of our attorneys guide you through the process.