Why bother with a Lady Bird deed in your estate plan?
Since most states don’t honor Lady Bird deeds, you might be tempted not to consider one when doing estate planning here in Texas. But don’t give short shrift to this very useful option that many Texans have chosen to protect their holdings and resources during their lifetimes.
Before deciding whether this option is workable for you, it’s important to understand just what a Lady Bird deed will and will not do for you and your beneficiaries.
Lady Bird deeds are enhanced life estate arrangements
As such, they offer the following benefits:
- No gift tax, because there is no present value to a future gift.
- The current owner holds life estate in the property
- Upon execution, the remainder of the interest in the real estate is transferred
- The present owner may during their lifetime end the remainder interest and arrange the transfer of real estate to another person
As you can see, many goals can be accomplished with a LadyBird deed.
Major protection from Medicaid estate recovery claims
Lady Bird Deeds allow family homesteads to be exempt from disqualifying the property’s owner from Medicaid. Even after the Medicaid patient dies, as long as the deed was never canceled, the property then is vested in whoever holds the remainder interest.
Other options that include Lady Bird trusts
Living trusts can be created wherein the trust is the beneficiary named on the Lady Bird deed. This is useful for minor beneficiaries who will need trustees to manage the property until the beneficiary reaches adulthood.
No estate planning situations are identical. It is always best to consider all the options you have when doing your estate planning.