Lady Bird Deeds, also known as Enhanced Life Estate Deeds, were first created and used in the state of Texas by attorneys in the late 1980s. They were named after Claudia Alta “Lady Bird” Johnson, the wife of former U.S. President Lyndon B. Johnson, who passed away in 2007.
This type of real estate deed allows property owners to transfer property to a named beneficiary at the owner’s death while retaining the right to use and enjoy the property during their lifetime. Unlike traditional life estate deeds, Lady Bird Deeds provide additional benefits to the property owner, including the ability to sell, mortgage or even revoke the deed during their lifetime.
The Lady Bird Deed has become popular because it provides a way for property owners to avoid probate and minimize the risk of losing their property to Medicaid estate recovery. It is also a useful estate planning tool for those who want to pass on their property to a loved one while retaining the right to use and control it during their lifetime.
A relatively simple document, the Lady Bird Deed is executed by the property owner and recorded in the county where the property is located. The deed names the property owner as the “grantor” and the named beneficiary as the “grantee.” It also includes a legal description of the property and states that the grantor retains a “life estate” in the property, which means they have the right to use and control the property during their lifetime.
The Lady Bird Deed differs from a traditional life estate deed in that it allows the grantor to retain certain powers over the property during their lifetime. For example, the grantor can sell or mortgage the property without the consent of the named beneficiary. The grantor can also revoke the deed at any time during their lifetime, which means that they can change their mind about who will receive the property at their death.
One of the primary advantages of the Lady Bird Deed is that it allows property owners to avoid probate, which is the legal process of settling an estate after someone dies. Probate can be time-consuming and expensive, and it can also result in the loss of some or all the property to Medicaid estate recovery. By using a Lady Bird Deed, property owners can ensure that their property passes directly to their named beneficiary without the need for probate.
Another advantage of the Lady Bird Deed is that it can help to protect the property from Medicaid estate recovery. Medicaid is a government program that provides healthcare benefits to low-income individuals and families. When a person receives Medicaid benefits, the government may seek to recover the cost of those benefits from their estate after they die. This can help to minimize the risk of losing the property to Medicaid estate recovery.
In summary, a Lady Bird Deed is an extremely useful and simple tool to help protect your estate. It is important to understand that laws change all the time. Although a Lady Bird Deed is a valid document according to the laws in the State of Michigan, the law may change deeming these types of deed invalid. It is important to consult with a licensed attorney in your jurisdiction who specializes in estate planning to determine whether a Lady Bird Deed is the right estate planning tool for your individual needs.