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How a Lady Bird Deed is a Good Option

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Hello Friends,

I’ve got a topic I wanted to talk to you all about. This is something that’s not a new issue, but it’s something that started coming in more frequently to our office. So, there’s a thing called Medicaid Recovery Program. This program is designed so that if your family member received Medicaid benefits, then upon their passing, those benefits can be recuperated by the state based on their homestead.

Let me tell you more…

So, the state would be able to recover their funds expended for nursing home care and a couple of other things to get their money back based on the sale of that house. In essence, they would have a lean on that property. One of the things that we can do to address that ahead of time is what is called a Lady Bird Deed. That’s an interesting nickname. It has nothing to do with the former president’s wife. It’s just the name that they came up with and that’s what we call it. What it’s really called is a Revocable Life Estate Deed.

How this works

How this works is, the person who owns the property will transfer it in this revocable life estate deed and will transfer it to whoever their family is that they want to receive that house. Then, in that deed, they will retain a life estate. A life estate is the right to the full use and enjoyment of the property while they’re alive. They’ll also retain a power to sell. So that way, when they pass, full title will be in the name of the person that they’ve transferred it to. Meanwhile, while they’re alive, they retain all the rights and powers.

Medicaid Recovery Program

Now, one of the little caveats in the Medicaid Recovery Program and to qualify for those benefits is if you gift or sell or transfer property, you can be disqualified until you’ve spent down that amount of money on your own care. You could get disqualified by this transfer except for the fact that it’s revocable; so it’s good to know that  you can always revoke it letting you have full control of the property. This can be a good option to transfer property.

Setting up a Lady Bird Deed

This is one option I discuss with my clients if perhaps they have a parent who maybe doesn’t have a lot of assets and could be living their later years of life and they need to just go ahead and make sure that their loved ones receive their assets in the most efficient way. If you’re if you’re interested in learning more about this, I’ll be happy to visit with you. You can reach out to our office and we can set up a time to discuss the lady bird deed option see if it’s something that might work for your estate plan or for one of your loved ones as far as part of their planning. All right until next time.

If you would like to visit with us in person by appointment or by Zoom, contact us today.

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