by Kristen Ishihara and Chris Parker with Ishihara & Parker Law Firm PLLC

Hey there! Today, we're diving into a topic that we get a lot of questions about: Lady Bird Deeds (also known as Enhanced Life Estate Deeds). If you've been wondering what they are and whether you need one, you’re in the right place.

What is a Lady Bird Deed?

A Lady Bird Deed is a legal tool used to transfer property while avoiding probate. Unlike a traditional life estate, a Lady Bird Deed allows the owner to retain complete control over their property during their lifetime. This means you can still sell it, mortgage it, or even revoke the deed if you change your mind. However, once you pass away, the property automatically transfers to your named beneficiaries—skipping the probate process entirely.

Why Use a Lady Bird Deed?

Many people hear about Lady Bird Deeds and assume it’s the perfect solution for passing down property. And sometimes, it is! Here are some common scenarios where it might be useful:

• Medicaid Planning: One of the biggest benefits of a Lady Bird Deed is that it doesn’t count as a gift for Medicaid eligibility purposes. This means you can transfer property without affecting Medicaid benefits or triggering penalties.
• Avoiding Probate: The deed allows property to pass directly to beneficiaries without going through the long and costly probate process.
• Retaining Control: Unlike a traditional life estate, you’re not locked into the decision. You can revoke or change the deed if needed.

When a Lady Bird Deed Might Not Be the Best Choice

As great as it sounds, a Lady Bird Deed isn’t always the right tool. Here are a few reasons why:

1. Title Issues: If you revoke and redo Lady Bird Deeds multiple times, it can create a messy chain of title. This makes selling the home down the road more difficult.
2. Tax Confusion: After filing a Lady Bird Deed, tax appraisal offices may list your beneficiaries as owners, which can cause confusion when property tax bills arrive.
3. Selling the Property: If you decide to sell, the title company might require the beneficiaries listed in the deed to sign off on the sale—even though they technically don’t own the property yet.
4. Complicated Family Dynamics: If you have multiple children or family members who may dispute ownership, a Lady Bird Deed can sometimes create more problems than it solves.

Lady Bird Deeds & Medicaid: A Powerful Tool

If Medicaid is a concern, a Lady Bird Deed can be an important part of protecting your assets. Medicaid has a five-year look-back period that penalizes gifts, but since a Lady Bird Deed is not considered a completed gift, it won’t trigger those penalties.

For married couples, there’s also a strategic way to handle property transfers. If one spouse needs Medicaid while the other remains at home, transferring the home fully to the non-Medicaid spouse and then using a Lady Bird Deed can help protect the property.

The Bottom Line: Should You Use a Lady Bird Deed?

If you're applying for Medicaid, YES—Lady Bird Deeds can be a lifesaver.

For general estate planning? Maybe, but probably not your best option. If you have a simple estate and a cooperative family, it might work. But if you anticipate any changes, disputes, or potential complications, other estate planning tools (like a trust) might be a better fit.

Need Help Deciding?

Every situation is different, so it's always best to get personalized advice. If you’re considering a Lady Bird Deed or have questions about estate planning, reach out to an experienced attorney who can guide you in the right direction!

Got questions? Drop them in the comments—we’d love to help!

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