A Lady Bird Deed is one of the best estate planning tools Florida has to offer. Formally known as an “Enhanced Life Estate Deed,” this type of deed allows a property to pass automatically to a decedent’s designated beneficiaries upon death without the need for probate.
The history behind the name of the “Lady Bird” Deed originated in the 1980s. The Florida lawyer who created this instrument employed former U.S. President Lyndon Johnson and his wife Lady “Bird” to explain to his colleagues how the deed would work. Word of this new legal instrument soon spread throughout the Florida legal community, making the name stick.
How Does a Florida Lady Bird Deed Work?
Simply put, a Lady Bird Deed allows the owner of a piece of property to give the property to another individual without losing their right to own and make changes to the property until they die. Although a Florida Lady Bird Deed is similar to a standard Life Estate Deed, what distinguishes the former is the fact that it gives additional rights to the person who creates the deed.
Typically, standard life estate deeds come with several restrictions. For example, after the deed creation, the former owner completely loses his or her right to mortgage or sell the property without the consent of the future interest holder. Additionally, the owner can become liable to the beneficiary of the life estate deed for any misuse of the property.
What are the Benefits of the Lady Bird Deed?
A Lady Bird Deed allows the owner of a property to give it to a beneficiary without losing his or her property rights. Essentially, this means that the property owner keeps the right to use, lease, and profit from the property during his or her lifetime without consent of the future interest holder. Additionally, the property owner retains the right to sell the property at any time. Once the creator of the deed passes away, the property does not need to go through the Florida probate process, which can save the beneficiaries a lot of time and money.
Can a Ladybird Deed Help Someone Qualify for Medicaid?
It can. Here is how:
Only the people who pass the federal government’s Income and Asset tests can receive Medicaid benefits. These tests are in place to make sure the benefits go to those who genuinely need help to cover medical costs. However, the current eligibility requirements for Medicaid assistance are astonishingly restrictive. Many middle-class residents would not qualify, which would leave them unable to afford expensive healthcare costs such as nursing care or assisted the living.
A Lady Bird Deed is a powerful tool that can allow an individual hoping to qualify to receive Medicaid benefits to pass The Asset Test. Someone’s primary residence is typically not counted under The Asset Test in cases where the equity of the home is under a specific value. However, this restriction is not hard to exceed, given the rising home costs we see today.
When determining what assets can influence The Asset Test, Medicaid has a “look-back” period. Such period starts when you apply for Medicaid benefits. The government looks back 5 years to see if you have given away any assets in the past. Even if you no longer own the assets, you may still be held to have the assets for purposes of obtaining coverage. The intent is to prevent people from qualifying for Medicaid by simply giving away their estates to their heirs.
However, a Florida Lady Bird Deed is not considered a transfer for Medicaid purposes. As aforementioned, when you transfer a piece of property through a Lady Bird Deed, you are still the owner of that property for as long as you live.
How a Farshchian Law Attorney Can Help
A Florida Lady Bird Deed can be an indescribably helpful tool when it comes to estate planning. However, as with any other estate planning documents, hiring an experienced lawyer to help you create it is critical.
At Farshchian Law, we can assist you with drafting a Lady Bird Deed that will help you maintain control of your property while you are still living while allowing your heirs to avoid probate upon your death. Please call us at (800) 604-1871 or email us at Info@JFRealEstateLaw.com for a free consultation on Lady Bird Deeds and our other estate planning services.