A Lady Bird Deed, also known as an enhanced life estate deed, is an estate planning tool that allows property owners to designate a beneficiary who will inherit the property without undergoing probate. This method is available in Florida, Michigan, Texas, Vermont, and West Virginia.
Originating from the nickname of Claudia Alta "Lady Bird" Johnson, the term gained popularity due to attorney Jerome Ira Solkoff’s use of it in the 1980s, although there is no evidence that either Lady Bird or President Lyndon Johnson used such a deed. The Lady Bird Deed allows the owner to retain full control of the property, enabling them to sell or mortgage it, while also being able to change the beneficiary without their consent.
The cost of creating a Lady Bird Deed is relatively low, potentially as little as $30 for a DIY approach or several hundred dollars when utilizing a professional service. This option is particularly useful for avoiding probate and is frequently used in Medicaid planning, where individuals seek to arrange their finances to qualify for benefits while retaining certain assets.
Each state has specific Medicaid eligibility requirements, and in states with Lady Bird Deeds, property transferred to a beneficiary through this deed avoids inclusion in the estate during Medicaid recovery after the owner’s death. However, alternative estate planning strategies, such as child caregiver exemptions or Medicaid Asset Protection Trusts, may be necessary for individuals in states without this option.
While Lady Bird Deeds may not appeal to all wealthy individuals, understanding their functionality and advantages can be beneficial for those needing effective estate planning solutions.
Why this story matters
- Provides insights into an accessible estate planning tool that can help avoid probate and protect assets.
Key takeaway
- A Lady Bird Deed allows property owners to retain control while designating a beneficiary, facilitating easier asset transfer without probate.
Opposing viewpoint
- Critics argue that reliance on such deeds may not be suitable for everyone, highlighting the need for personalized estate planning strategies.
